Futures slumped as much as 1.8 percent in New York while Brent crude in London slid below $50 a barrel. U.S. production rose for the 14th time in 15 weeks, according to Energy Information Administration data. Inventories fell by 6.43 million barrels last week, more than double the median estimate in a Bloomberg survey. OPEC output climbed in May, led by gains from Libya and Nigeria, countries that are exempt from supply cuts.
Oil slid below $50 a barrel last week after the agreement by the Organization of Petroleum Exporting Countries and its allies to prolong output curbs for nine months disappointed some investors hoping for more. While U.S. stockpiles have edged lower, rising American production and drilling is fanning concerns that OPEC’s efforts to trim a global glut will be hampered.
“The lack of moderation in U.S. production is undercutting OPEC efforts to manage the market,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “Demand is improving, so that will limit the downside, but getting above $55 a barrel will be very difficult.”
West Texas Intermediate for July delivery lost as much as 86 cents to $47.50 a barrel on the New York Mercantile Exchange, and was at $47.54 at 7:50 a.m. in Hong Kong. Total volume traded was about 62 percent above the 100-day average. Prices are down 4.5 percent this week, the most since the week ended May 5. The contract gained 4 cents to $48.36 on Thursday.
Brent for August settlement dropped as much as 90 cents, or 1.8 percent, to $49.73 a barrel on the London-based ICE Futures Europe exchange. Front-month prices are down 4.5 percent this week. The global benchmark crude traded at a premium of $2.03 to August WTI.
U.S. crude output rose by 22,000 barrels a day to 9.34 million, according to a report Thursday from the EIA. Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, fell for a second week to 64.8 million barrels.
- OPEC output in May rose by 315,000 barrels a day from a month earlier to 32.21 million, according to a Bloomberg survey of analysts, oil companies and ship-tracking data.
- Russia can “live forever” with an oil price at, or below, $40 a barrel, Economy Minister Maxim Oreshkin said in a Bloomberg interview.