Oil prices gave up their early gains on Wednesday, retreating due to the announcement by Saudi Aramco that it had received directives from the Ministry of Energy to increase its production capacity by one million barrels per day.
According to Reuters, by 0740 GMT, Brent crude was down $ 0.41, or 1.1 percent, to $ 36.81 a barrel, while U.S. West Texas Intermediate was down $ 0.42, or 1.2 percent, to $ 33.94.
Amin Al-Nasser, CEO of Aramco, said that the state-run oil giant received guidance from the Ministry of Energy to increase its production capacity to 13 million barrels per day from 12 million barrels per day at present.
Saudi Arabia has been pumping around 9.7 million barrels per day in the past few months, but it has additional capacity to activate and hundreds of millions of barrels of stored crude.
Prices rose earlier on Wednesday, offsetting nearly half of Monday's 25 percent loss, thanks to hopes of lower production due to spending cuts from North American producers to cope with crude prices falling to their lowest levels in several years.
Data from the American Petroleum Institute showed that US crude inventories rose in the most recent week, while gasoline and distillate stocks declined.
