February 8, 2018, by Alex Longley
Oil fell for a fifth day as surging U.S. output and a rising dollar sent crude to its biggest drop in two months.
Futures fell as much as 1 percent in New York after Department of Energy data yesterday showed U.S. crude production jumped to a record 10.25 million barrels a day last week. The global Brent benchmark slipped below $65 for the first time since late December. The Bloomberg Dollar Spot index traded higher on Thursday.
The U.S. continues to be the biggest obstacle to the Organization of Petroleum Exporting Countries’ efforts to alleviate a global oversupply. American crude production has now eclipsed Saudi Arabia’s output, and Citigroup Inc. expects it to breach 11 million barrels a day by the end of summer, several months earlier than the U.S. government’s own forecast. A rising dollar in recent days has also weighed on prices, though
“Supply looks quite healthy and that’s taking the edge off oil prices,” said Nitesh Shah, a commodities analyst at ETF Securities in London. “A few of the catalysts that held up prices in January are fading away.” Rising U.S. supplies and rig counts have added to the dollar’s pressure on prices, he said.
West Texas Intermediate for March delivery fell 45 cents to $61.34 a barrel on the New York Mercantile Exchange at 1:01 p.m. in London. Total volume traded was about 23 percent above the 100-day average. The grade suffered its biggest drop in two months on Wednesday after the publication of U.S. inventory data. Prices are heading toward their longest stretch of declines since April.
Brent for April settlement was 55 cents lower at $64.96 a barrel on the London-based ICE Futures Europe exchange, falling below $65 for the first time since Dec. 22. The global benchmark traded at a premium of $3.88 to April WTI.
U.S. oil output increased for a fourth week, Energy Information Administration data showed on Wednesday. Crude in the nation’s storage tanks and terminals increased by 1.9 million barrels last week. Gasoline and distillate stockpiles expanded as well.
“U.S. crude production should keep hitting new highs throughout 2018,” Citigroup analysts including Ed Morse wrote in a Feb. 7 note.
Other oil-market news:
The North Sea’s Forties Pipeline System — one of the world’s most important crude oil conduits — resumed overnight after a short halt, coming on the heels of a more significant stoppage in December. China’s crude imports surged to a record 9.61 million barrels a day in January as independent refiners boosted shipments after the government expanded the amount of overseas purchases they can make. Total SA signaled growing confidence that the oil-industry slump is ending by pledging to raise its dividend and buy back shares in the coming years. DNO ASA plans to increase investments in Iraqi Kurdistan by 50 percent this year after the region’s semi-autonomous government made more regular payments for crude exports.