Oil prices maintained losses Wednesday after weekly U.S. inventory data showed that crude stockpiles shrank but production rose to a new record.
Light, sweet crude for July delivery recently fell 91 cents, or 1.5%, to $60.35 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell $1.27, or 1.9%, to $64.22 a barrel on ICE Futures Europe.
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Traders have closely scrutinized weekly inventory data since oil prices plunged to near-six-year lows earlier this year for hints of when spending cutbacks by oil companies will lead to lower U.S. production. So far, production has held steady near multi-decade highs despite the number of rigs drilling for oil in the U.S. dropping by half, suggesting that shale-oil production can be cheaper and more efficient than many had expected.
But stockpiles of crude oil appear to have peaked after hitting a record high in April. Commercial inventories fell by 1.9 million barrels last week, the fifth straight weekly decline.
Stocks now stand at 477.4 million barrels, compared to the record high of 490.9 million barrels reached in April.
"They're drawing, but they're drawing from absolute high levels," said Kyle Cooper, analyst at IAF Advisors in Houston. In addition, he noted, refineries processed less crude last week, and imports and production rose.
"I don't know how you have any draw in crude when you have those types of supply numbers," he said.
Domestic oil production rose by 20,000 barrels a day last week to 9.59 million barrels a day, the U.S. Energy Information Administration said Wednesday.
The weekly data are based on a forecasting model and are only accurate within about 100,000 barrels a day, according to the EIA. Even so, this is the highest level in weekly data going back to 1983. In monthly data, which don't line up exactly with weekly data, this is the highest production level since 1972.
"Despite the fact that you have all-time record production numbers, you're still taking almost two million barrels out of storage," said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. "That implies a certain degree of crude-oil demand."
Gasoline futures recently fell 1.7% to $2.0306 a gallon. Diesel futures fell 2.1% to $1.9042 a gallon.
The U.S. added 500,000 barrels of crude oil to its strategic petroleum reserve in the week. The Energy Department in March announced plans to buy as many as five million barrels of oil for the reserve to replace the amount of oil it sold from the reserve in 2014.
Traders also tracked remarks by officials from the Organization of the Petroleum Exporting Countries which seemed to reaffirm market expectations that the oil cartel won't change its production target at its June 5 meeting.
(By Nicole Friedman)