Oil prices fell on Wednesday, giving up earlier gains, after Saudi Aramco said it had been directed by the energy ministry to raise its production capacity by a million barrels per day.
Brent crude slid $1.13, or 3%, to trade at $36.09 U.S. per barrel, while U.S. West Texas Intermediate crude dropped $1.13, or 3.3%, to trade at $33.23 U.S. per barrel.
Aramco's CEO said the state-run oil giant had been asked by the Ministry of Energy to boost its production capacity to 13 million barrels per day (bpd) from 12 million bpd now.
Saudi has been pumping around 9.7 million bpd in the past few months, but has extra capacity it can turn on and has hundreds of millions of barrels of crude in storage.
Oil prices had climbed earlier in the day, recouping nearly half of Monday’s 25% losses, on hopes spending cuts by North American producers to cope with multi-year low crude prices would lead to a drop in output.
U.S. crude oil inventories rose in the most recent week, while gasoline and distillate stocks dropped, according to the American Petroleum Institute showed.
On Wednesday the U.S. Energy Information Administration said that for the week ending March 6 inventories increased by 7.7. million barrels.
