SINGAPORE (Reuters) – Oil prices dipped on Thursday as U.S record. crude output heightened concerns of a return of global oversupply, stockings talk from within OPEC that production curbs may become a once again to prevent a glut.
FILE PHOTO: Pump jacks that operate at sunset oilfield in Midland, Texas U.S. August 22, 2018. REUTERS / Nick Oxford / File Photo
LCOc1's Front-month Brent crude oil futures were at $ 71.93 a barrel at 00301 GMT, down 14 cents from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $ 61.68 per barrel, virtually flat from their last settlement.
"The prices continue to demonstrate … bearish influences amidst the market concerns of rising global inventories … (and as) increasing output levels threatening to upset supply fundamentals in Q4 2018."
A group of producers from the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) as well as Russia decided on last June to output the output of curbs in place since 2017, after pressure from U.S. President Donald Trump for prices and make up for supply losses from Iran.
But with OPEC-led production cuts next year cannot be ruled out, two OPEC sources said on Wednesday.
"OPEC and Russia may use cuts to support $ 70 per barrel," said Ole Hansen, head of commodity strategy at Saxo Bank.
"The introduction of U.S. "This week's sanctions against Iran failed to lift the market given the announcement that eight countries, including three of the worlds biggest importers, would receive money to carry on buying Iranian crude for up to six months," Hansen said.
THE ONLY WAY IS UP?
At the heart of rising global output it has been a relentless increase in U.S. crude production C-OUT-T-EIA, which recorded 11.6 million barrels per day (bpd) in the week ending Nov. 2, according to the Energy Information Administration (EIA) data released on Wednesday.
That's threefold increase from the U.S. low reached a decade ago, and a 22.2 percent rise just this year. It makes the United States the biggest producer of crude oil.
More U.S. oil will likely come. The EIA expects output to break through 12 million bpd by mid-2019, thanks largely to a surge in shale oil production.
Meanwhile, U.S. C-STK-T-EIA crude inventories rose by 5.8 million barrels in the week ending Nov. 2, to 431.79 million barrels, the EIA said.
Crude stocks moved back above their five-year average levels in October.
Production is not just risen in the United States, but also in many other countries, including Russia, Saudi Arabia, Iraq and Brazil, stockings of producers between 2014 and 2017.
"Producers are concerned about the potential oversupply … after EIA reported that rose crude inventories were 5.8 million barrels," said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
Reporting by Henning Gloystein; Editing by Joseph Radford