Oil Falls as Shale Increases U.S. Stockpiles
By Christopher Alessi
LONDON--Oil prices continued to fall Thursday morning on the back of surging U.S. production and rising inventories.
Brent crude, the global benchmark, was down 0.70% at $65.09 a barrel on London's Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.73% at $61.34 a barrel.
The U.S. Energy Information Administration on Wednesday reported U.S. crude output climbed to 10.251 million barrels a day last week--a weekly record--mainly as a result of relentless shale production. The agency also said that stockpiles of crude rose by 1.9 million barrels in the week ended Feb 2.
Crude prices have given up nearly all of this year's gains, falling roughly 6% since late last week. Oil had initially been pressured amid the global stock market plunge but continued to decline even as equities recovered.
The EIA's weekly data came on the heels of an upwardly revised forecast for total U.S. production this year and next. The agency now expects U.S. output to average nearly 10.6 million barrels a day this year and 11.2 million barrels a day in 2019.
"The U.S. cannot stop producing," according to analysts at consultancy JBC Energy. "Once the weekly EIA data showed crude output assessments at 10.25 million barrels a day, selling pressure started to mount in earnest," the analysts wrote in a daily note Thursday.
Shale should continue to pressure the market, many analysts say.
Bjarne Schieldrop, chief commodities analyst at SEB Markets, said oil markets continue to be in a "kind of shale oil denial" that is still supporting prices.
Oil market observers are looking ahead to weekly data from Baker Hughes on Friday on the number of active rigs drilling for oil in U.S. The Organization of the Petroleum Exporting Countries and the International Energy Agency both release their monthly oil market reports at the start of next week.
Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was down 0.20%, at $1.76 a gallon. ICE gasoil, a benchmark for diesel fuel, changed hands at $575.25 a metric ton, down 1.07% from the previous settlement.
Write to Christopher Alessi at firstname.lastname@example.org
(END) Dow Jones Newswires
February 08, 2018 07:39 ET (12:39 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.