Oil prices on Thursday settled at their lowest level in about two weeks, a day after data showed a weekly rise in U.S. crude supplies and production, along with an unexpected climb in gasoline stockpiles.
April West Texas Intermediate crude CLJ8, -0.44% shed 65 cents, or 1.1%, settle at to $60.99 a barrel on the New York Mercantile Exchange. The contract marked its lowest finish since Feb. 14, after losing roughly 4.8% for the month. That was the first monthly loss since August.
The global crude benchmark, May Brent UK:LCOJ8 fell 90 cents, or 1.4%, to $63.83 a barrel on the ICE Futures Europe exchange, its lowest finish since Feb. 13. Lead-month Brent fell about 4.7% in February, its first monthly loss since June.
U.S. crude-oil stocks rose by 3 million barrels last week, while gasoline inventories rose 2.5 million barrels, the Energy Information Administration’s weekly report published Wednesday showed.
“The weekly stock report was anything but positive,” said Tamas Varga, analyst at brokerage PVM.
The rise in gasoline stocks was counter-seasonal as fuel inventories don’t typically build during the ongoing refinery maintenance period.
“Refinery utilization is still low, so we should see lower stocks, but there is not yet strong demand,” said Ehsan Ul-Haq, director for crude oil and refined products at Resource Economist Ltd, adding that gasoline imports were also low.
Gasoline demand typically starts to pick up ahead of the U.S. driving season, which starts on Memorial Day on May 28.
Oil prices were also pressured by EIA data showing weekly U.S. crude production hit a fresh high of 10.283 million barrels a day.
“Concerns are rising that surging U.S. oil production alone, may cause the global market to shift from a roughly balanced dynamic to a surplus,” said Tyler Richey, co-editor of the Sevens Report.
“So far in 2018, U.S. oil output is on pace to increase 3 million barrels a day d this year”—hat is three times greater than the EIA’s expectations of 1 million barrels a day, he said. “At the current pace, U.S. oil production will rise to more than 13 million barrels a day by the end of 2018,” said Richey.
“An increase of that size will overwhelm the only modest demand growth that is expected globally, which would very likely lead to the second major oil bear market in just the last five years,” he said.
The International Energy Agency expects the U.S. to eclipse Russia by 2019 as the world’s biggest crude producer with the shale oil boom continuing to boost output.
Coordinated efforts by the Organization of the Petroleum Exporting Countries and other major producers including Russia to cut production and counter the rise in output from countries including the U.S helped underpin prices.
“The tug-of-war between OPEC and its peers and U.S. shale producers continues,” PVM’s Varga said.
On Nymex, March gasoline US:RBH8 lost 1.5% to $1.896 a gallon, while April heating oil US:HOH8 fell 1% at $1.886 a gallon.
