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Hong Kong - Oil headed for its biggest weekly drop in four weeks as US crude production expanded to the highest level since August 2015, countering a slide in stockpiles.
Futures slumped as much as 1.8% in New York while Brent crude in London slid below $50 a barrel. US production rose for the 14th time in 15 weeks, according to Energy Information Administration data.
Inventories fell by 6.43 million barrels last week, more than double the median estimate in a Bloomberg survey. OPEC output climbed in May, led by gains from Libya and Nigeria, countries that are exempt from supply cuts.
Oil slid below $50 a barrel last week after the agreement by the Organisation of Petroleum Exporting Countries and its allies to prolong output curbs for nine months disappointed some investors hoping for more. While US stockpiles have edged lower, rising American production and drilling is fanning concerns that OPEC’s efforts to trim a global glut will be hampered.
“The lack of moderation in US production is undercutting OPEC efforts to manage the market,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “Demand is improving, so that will limit the downside, but getting above $55 a barrel will be very difficult.”
West Texas Intermediate for July delivery lost as much as 86 cents to $47.50 a barrel on the New York Mercantile Exchange, and was at $47.54 at 09:50. Total volume traded was about 62% above the 100-day average. Prices are down 4.5% this week, the most since the week ended May 5. The contract gained 4c to $48.36 on Thursday.
Brent for August settlement dropped as much as 90c to $49.73 a barrel on the London-based ICE Futures Europe exchange. Front-month prices are down 4.5% this week. The global benchmark crude traded at a premium of $2.03 to August WTI.
US crude output rose by 22 000 barrels a day to 9.34 million, according to a report on Thursday from the EIA. Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, fell for a second week to 64.8 million barrels.
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