Oil Slips as Rising Production Outweighs Shrinking U.S. SuppliesBy
U.S. crude production jumps by the most since June: EIA Data
Nationwide crude inventories fall for a seventh straight week
Oil declined to the lowest level in more than three weeks as investors focused in on a rise in U.S. crude production, even as stockpiles slipped by the most since September.
Futures fell for a third day, dropping 1.6 percent in New York. While crude inventories continued to decline, losing 8.95 million barrels last week, U.S. output gained the most since June to drive prices for West Texas Intermediate below $47 a barrel. Gasoline stockpiles climbed for a second week, data from the Energy Information Administration showed on Wednesday.
“It’s always telling when the market really doesn’t fire after a bullish number,” said Andrew Lebow, senior partner at Commodity Research Group, referring to the inventory drop. Investors look at production as something “that could be worrisome down the road,” he said in a telephone interview.
Oil in New York has lingered below $50 a barrel this month as investors weigh rising global supply against output cuts by the Organization of Petroleum Exporting Countries and its allies. OPEC won’t clear the global glut any time soon since any increase in price continues to bolster rival production from U.S. shale, according to the International Energy Agency.
WTI for September delivery fell 77 cents to settle at $46.78 a barrel on the New York Mercantile Exchange. Total volume traded was about 32 percent above the 100-day average. America’s benchmark has dropped about 6.6 percent in August, putting it on track to become the largest monthly decline since July 2016.
Brent for October settlement lost 53 cents to end the session at $50.27 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $3.33 to October WTI.
U.S. crude inventories slipped to 466.5 million barrels last week, the lowest level since January 2016. At the same time, gasoline inventories rose by 22,000 barrels to 231.1 million and Cushing, Oklahoma crude supplies climbed by 678,000 barrels, the biggest increase since March, EIA data showed.
Crude production jumped by 79,000 barrels a day to to 9.5 million a day.
“Everybody loves the inventory decline, but the production is just something the bears continue to focus on,” Rob Thummel, managing director and portfolio manager at Tortoise Capital Advisors LLC, who helps manage $16 billion in energy-related assets, said by telephone. Investors are looking at “that continued increase in U.S. production and the pressure that might put on oil prices.”
- U.S. crude imports from Saudi Arabia rose 259,000 barrels a day to 813,000 last week, while those from Iraq increased by 192,000 barrels a day to 716,000, according to preliminary EIA data for week ended August 11.
- Libya’s Sharara oil field is operating normally, Mustafa Sanalla, head of state-run National Oil Co., said during a visit in which he discussed revising security measures following recent incidents, according to a statement on the company’s website.