Oil fell for a second day, trimming a weekly advance on concern rising output from OPEC’s biggest members will swell a global glut.
Saudi Arabia, Iraq and the United Arab Emirates each produced at a record in May, the International Energy Agency said Thursday. While production from prolific shale formations in the U.S. will fall next month to the lowest level since January, the nation’s stockpiles remain more than 90 million barrels above the five-year seasonal average.
Oil’s rebound from a six-year low has stumbled amid speculation that the price recovery will encourage producers to pump more oil, prolonging a surplus. The Organization of Petroleum Exporting Countries last week decided to maintain its output target as it sought to defend market share against higher-cost producers including U.S. shale.
“Fundamentally, the market is incredibly weak,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “OPEC production is going to stay high. They are going to keep their word. We still have an awful a lot of crude to work off in the U.S.”
West Texas Intermediate for July delivery declined 81 cents, or 1.3 percent, to end at $59.96 a barrel on the New York Mercantile Exchange. The price, which rose 83 cents this week, has ranged from $56.51 to $61.85 for the past five weeks.
Brent for July settlement slid $1.24 to $63.87 barrel on the London-based ICE Futures Europe exchange, up 0.9 percent this week. The European benchmark crude ended at a premium of $3.91 to WTI, the smallest since April 15.
Saudi Arabia, the world’s largest crude exporter, boosted output to 10.25 million barrels a day last month, the highest level since the IEA began tracking the kingdom’s supply in 1984. OPEC’s own data go back further and show Saudi Arabia pumped the most since August 1981.
Production from OPEC’s 12 members rose by 50,000 barrels a day to 31.33 million, the highest since August 2012, according to the IEA, an adviser to developed economies on energy policy. Saudi Arabia, Iraq and the U.A.E. account for at least 18 percent of global oil output.
OPEC maintained its quota at 30 million barrels a day at a June 5 meeting in Vienna. The group has pumped above that target for the past 12 months, data compiled by Bloomberg show.
In the U.S., the world’s biggest oil consumer, crude inventories decreased for a sixth week through June 5 to 470.6 million barrels, the EIA said Wednesday. Production climbed to 9.61 million a day, the fastest pace in data compiled by the EIA since January 1983.
Monthly production will start to fall in June through early 2016, the EIA said Tuesday in its Short-Term Energy Outlook. Output reached 9.59 million barrels a day in May, the highest since 1972.
Rigs targeting oil in the U.S. fell by seven to 635 last week, Baker Hughes Inc. said Friday. The count is the lowest since August 2010.
Sixteen of 26 analysts and traders, or 62 percent, were bearish on WTI, according to a Bloomberg survey through Thursday. Six respondents were bullish while four were neutral.