Oil prices ended lower again on Thursday on increased concerns about growth in U.S. production and inventories, despite expectations that major world producers will extend a supply-cut deal later this month.
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Brent crude futures LCOc1 settled 51 cents, or 0.8 percent, lower at $61.36 per barrel, running its streak of losses to five straight days. U.S. light crude CLc1 fell for a fourth consecutive session, ending down 19 cents, or 0.3 percent, at $55.14 a barrel.
Oil prices have slipped from the two-year highs hit last week by both crude benchmarks on signs that U.S. supply is rising and could potentially undermine OPEC’s efforts to tighten the market.
The market has been bolstered of late by funds extending long positions on a bullish outlook for the commodity due to tightening supply worldwide.
Expectations that the Organization of the Petroleum Exporting Countries will agree to extend their supply-cut pact with other major world producers in Vienna on Nov. 30 has offset some of the recent pressure on prices. Now, some analysts believe there won’t be clarity on the market’s direction until after OPEC meets on November 30.
“Certainly U.S. oil production is not slowing down. If crude imports remain elevated and exports don’t rebound, then the bullish underlying tone begins to fade,” said Kyle Cooper, analyst at IAF Advisors in Houston.
The U.S. Energy Information Administration on Wednesday showed domestic crude inventories C-STK-T-EIA rising for a second week, building by 1.9 million barrels in the week to Nov. 10. Stockpiles of gasoline also surprisingly rose.
The United States is expected to account for more than 80 percent of the growth in world crude supply in the next decade, the International Energy Agency said on Thursday, and weekly data shows ongoing boosts in production.
U.S. crude oil production C-OUT-T-EIA hit a record of 9.65 million barrels per day, meaning output has risen by almost 15 percent since its mid-2016 low.
By contrast, RBC commodity strategist Michael Tran noted on Thursday that most of the rest of the world’s inventories are in line with historic averages.
“It is no coincidence that the recent price rally has occurred concurrently with several weeks of record setting surges in exports,” he wrote.
OPEC and non-OPEC exporters including Russia agreed a year ago to cut crude output by 1.8 million bpd between January this year and March 2018 to bolster prices. Oil ministers have signaled that they are likely to extend the agreement, possibly until the end of next year.