Mubasher: Oil prices declined on Thursday as the impact of a surprise drop in US crude inventories was wiped out by a surge in the country’s output, sending Brent away from a five-month peak reached in the prior session, according to Reuters.
By 7:14 am GMT, global benchmark Brent futures fell by 0.31% to $71.40 per barrel (pb), after hitting $72.27 pb, the highest level since 8 November, at their last settlement, while US Nymex crude futures declined by 0.24% to $63.61 pb.
The Energy Information Administration (EIA) reported that the US oil stockpiles saw a draw of 1.4 million barrels per day (bpd) last week, versus a forecast build of 1.7 million bpd, as per expected by analysts polled by Reuters.
“A persistent rise in US oil output, together with lingering demand-side concerns emerging from the US-China trade dispute, is limiting price gains,” London-based Interfax Energy analytics head Abhishek Kumar was quoted by the news agency.
While Chinese economy grew by 6.4% in the first quarter of this year at a better-than-expected pace, a progress remains to be seen in trade talks with the US, with the aim of hammering out a pact.
As the US-China trade dispute carried on, crude prices were supported by tightening supplies owing to the supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), as well as the impact of the US sanctions against oil-rich Venezuela and Iran.
Despite these bullish factors, surging US production managed to fill in the supply gap, according to Reuters.
However, the supply shortage cannot be totally replaced by US shale oil immediately due to refinery configurations.
“The unexpected drawdown in US commercial crude oil stocks was balanced by lower-than-expected withdrawals in the country’s gasoline and distillate inventories,” Interfax Energy’s Kumar said.