NEW YORK: Oil prices edged lower on Thursday as rising US production and inventories threatened to undermine a rally sparked by tightening world supply as a consequence of OPEC's curbs on output.
Brent crude futures were down 43 cents a barrel at $61.44 as of 12:17 p.m. EST (1717 GMT). If Brent ends lower, it would mark a fifth consecutive day of declines. US light crude fell 16 cents to $55.17 a barrel, putting it on track for a fourth straight day of declines.
Oil prices have slipped from the two-year highs hit last week by both crude benchmarks on signs that US supply is rising and could potentially undermine OPEC's efforts to tighten the market.
The US Energy Information Administration on Wednesday showed domestic crude inventories rising for a second week in a row, building by 1.9 million barrels in the week to Nov. 10 to 459 million barrels. Stockpiles of gasoline also surprisingly rose.
The United States is expected to account for more than 80 percent of the growth in world crude supply in the next decade, the International Energy Agency said on Thursday, and weekly data shows ongoing boosts in production.
US crude oil production has hit a record of 9.65 million barrels per day, meaning output has risen by almost 15 percent since its mid-2016 low.
By contrast, RBC commodity strategist Michael Tran noted on Thursday that most of the rest of the world's inventories are in line with historic averages.
"It is no coincidence that the recent price rally has occurred concurrently with several weeks of record setting surges in exports," he wrote.
Expectations that the Organization of the Petroleum Exporting Countries will agree to extend their supply-cut pact with other major world producers in Vienna on Nov. 30 has offset some of the recent pressure on prices.
OPEC and non-OPEC exporters including Russia agreed a year ago to cut crude output by 1.8 million bpd between January this year and March 2018 to bolster prices.
Oil ministers have signaled that they are likely to extend the agreement, possibly until the end of next year.
"It is widely believed that OPEC and non-OPEC nations will roll over their production until (end) 2018," said PVM Oil Associates analyst Tamas Varga.
"If they don't, or if the period will be shorter than nine months, I think we will see even lower prices. Brent would break back below $60 a barrel."
Comments
Comments are closed.