Futures slid as much as 2.2 percent in New York. Crude from the Sharara field in Libya has started flowing to the Zawiya refinery, according to a person with direct knowledge of the matter. U.S. output rose to the highest since August 2015, the Energy Information Administration said Wednesday, while inventories declined by more than double the amount analysts had forecast.
Oil has slipped over the past two weeks amid concern rising U.S. output will offset efforts by the Organization of Petroleum Exporting Countries and its allies to trim a global glut. Russia, which joined the bloc in cutting production in the six months to June, may find it more difficult to extend the deal as that would constrain plans by local companies to expand. Russian Energy Minister Alexander Novak said this week his country will wait to decide on joining OPEC in prolonging the output curbs.
“The market is technically weak and the Libya headline was the excuse we needed to sell off,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said by telephone. “We don’t know how long it will be online though, but as long as it’s operating it adds to the perception of an oversupplied market.”
West Texas Intermediate for June delivery dropped $1.05, or 2.1 percent, to $48.57 a barrel at 9:20 a.m. on the New York Mercantile Exchange. Futures touched $48.51, the lowest since March 29. Total volume traded was 42 percent above the 100-day average.
Brent for June settlement, which expires Friday, slipped $1.12, or 2.2 percent, to $50.70 a barrel on the London-based ICE Futures Europe exchange. It touched $50.60, the lowest since March 27. The global benchmark crude traded at a $2.13 premium to WTI.
U.S. crude production rose by 13,000 barrels to 9.27 million a day, according to data from the EIA. Nationwide stockpiles fell by 3.64 million barrels for a third weekly decline. They were projected to drop by 1.75 million barrels, according to the median estimate in a Bloomberg survey.
Technical factors are also weighing on prices. WTI and Brent are set to settle below the 200-day moving average for the first time in a month.
Oil supply and demand will rebalance in the second half of the year and OPEC is satisfied with participants’ compliance with the production cuts, the group’s Secretary-General Mohammad Barkindo said in a Bloomberg TV interview on Thursday. Saudi Arabia’s Energy Minister Khalid Al-Falih is engaging with many members of the bloc to achieve consensus before their next meeting in May, he said.
- Total SA posted a 56 percent increase in first-quarter profit, beating analysts’ estimates as crude prices rebounded and it continued to cut costs while boosting oil and gas production.
- While compliance with promised cuts by OPEC countries is “excellent,” commercial oil stockpiles remain “stubbornly” high, Total Chief Executive Officer Patrick Pouyanne said at summit in Paris.
- The OPEC deal has accelerated the rebalancing of the market and there’s been a rapid drawdown in floating oil storage, Saudi Aramco CEO Amin Nasser said in Paris. Oil demand will continue to be healthy in the foreseeable future, he said.