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 one per cent in New York after Department of Energy data yesterday showed U.S. crude production jumped to a record 10.25 million bbls/d last week. The global Brent benchmark slipped below $65 for the first time since late December.
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 bbls/d 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 US$61.34/bbl on the New York Mercantile Exchange at 1:01 p.m. in London. 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 US$64.96/bbl 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. crude production should keep hitting new highs throughout 2018,” Citigroup analysts including Ed Morse wrote in a Feb. 7 note.
© 2018 Bloomberg L.P.