Oil prices fall on rising US crude inventories and record production

The US now produces more crude oil than top exporter and Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries. (Reuters)

SINGAPORE: Oil prices dipped on Thursday, weighed down by swelling US crude inventories and record weekly US production that is countering efforts by producer group OPEC to cut supplies and prop up prices.
Brent crude oil futures were at $73.19 per barrel at 0404 GMT, down 17 cents, or 0.2 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were down 11 cents, or 0.2 percent, at $67.82 per barrel.
Prices were pulled down by a report from the US Energy Information Administration (EIA) on Wednesday showing US crude inventories jumped by 6.2 million barrels to 435.96 million barrels in the week to April 27, the highest level in 2018.
“The (EIA) report showed a much larger than expected crude build for last week as well as an unexpected build in gasoline inventories,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.
US oil production also rose to a record of 10.62 million barrels per day (bpd), a jump of more than a quarter since mid-2016.
The US now produces more crude oil than top exporter and Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries.
Only Russia currently pumps more oil, at around 11 million bpd, though the US could surpass that level soon.
US drillers added five oil rigs looking for new production in the week to April 27, according to energy services firm Baker Hughes, bringing the total count to 825, the most since March 2015.
US producers are being incentivized to ramp up production as OPEC restricts production and raises prices.
State-owned producer Saudi Aramco said on Wednesday it has raised the June price for its Arab Light grade for Asian customers by 70 cents a barrel versus May to a premium of $1.90 a barrel to the Oman/Dubai average, the highest since August 2014.
Overall, OPEC produced around 32 million bpd of crude oil in April, according to a Reuters survey, implying that its production is slightly below its target of 32.5 million bpd, due largely to plunging output in Venezuela.
BMI Research said it expects OPEC’s output to remain stable around or slightly above 32 million bpd for the rest of the year.