Global crude oil prices declined on continuous rising U.S.crude inventories.
U.S. crude stockpiles rose by 3.02 million barrels to 423 million last week, representing the fourth increase in five weeks, according to the Energy Information Administration report released on Wednesday. The highest level since December 2017 and more than the 3 million barrels projected by analysts.
Brent crude fell by 1.99 percent to $63.44 a barrel on Thursday, the lowest in two weeks. While West Texas Intermediate dipped by 1.74 percent to $60.57 a barrel. Crude oil has now erased most of the 2018 gains on rising U.S. production.
In November, U.S. production rose to a record high of 10.057 million barrels a day, surpassing Saudi Arabia capacity and trailing Russia, the world’s largest crude oil producer. The figure exceeded the 10.044 million barrels per day recorded in November 1970.
This, the U.S. government predicts to reach 11 million barrels per day later this year. Meaning, if OPEC and Shale producers failed to reach an accord on how to better manage global supplies, oil prices may drop below $55 a barrel.
“We’ve got a lot more oil to produce and we’ll be through that 11 million barrel-per-day threshold much sooner than expected,” said Phillip Streible, senior market strategist at RJO Futures in Chicago.
Again, the U.S. dollar has started showing a tight relationship with crude oil movement, gaining against most commodity-dependent currencies immediately the report was published before declining on new tariffs due to be announced later on Thursday by President Donald Trump. A move that could see importers of steel and aluminum paying 25 percent and 10 percent tariffs, respectively.
Meanwhile, Mohammad Barkindo, OPEC’s secretary general, will be meeting with Shale executives on Monday in Houston to discuss how to manage global supplies.
“One of the lessons learned from this oil-price cycle is that as producers we are all in the same boat,” Mohammad Barkindo said in an interview earlier this week.
