Oil drops further to towards steep weekly low
Oil prices dropped for a sixth day at the weekend, and were on track for their biggest weekly losses in 10 months, as record-high U.S. crude output added to concerns about a sharp rise in global supplies.
The drop came amid a rout in global equity markets sparked by inflation fears.
Brent futures LCOc1 were down 30 cents at $64.51 a barrel by 0925 GMT. On Thursday, Brent fell 1.1 percent to its lowest close since Dec. 20.
U.S. West Texas Intermediate, WTI crude CLc1 was down 42 cents at $60.73 a barrel, having settled down 1 percent in the previous session, its lowest close since Jan. 2.
Both contracts have fallen more than 9 percent from this year’s high point in late January. Brent was heading for a weekly loss of nearly 6 percent, its biggest since April, while WTI’s weekly decline of more than 7 percent is the steepest since March.
“It has now become painfully clear for beleaguered oil bulls that the early-year rally was not justified,” PVM Oil Associates’ Stephen Brennock said in a note. “In its place is a deepening price rout that has quashed any lingering pockets of optimism.”
U.S. domestic crude production hit a record of 10.25 million barrels per day (bpd) for the most recent week, according to the U.S. Energy Information Administration (EIA), while an outage on a key oil pipeline in the North Sea proved short-lived.
OPEC member Iran also announced plans on Thursday to increase production within the next four years by at least 700,000 barrels a day, which Brennock said marked “a hat-trick of heartaches” for oil bulls.
U.S. production gains have put it on track to overtake the current output in Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries (OPEC).
The U.S. increases have complicated efforts by OPEC and other producers, including Russia, to balance global markets and force down excess global inventories by cutting output. The group extended the production cut deal, which began in January 2017, until the end of 2018.