Oil prices fall as U.S. output hit record high

Oil prices fell on Thursday after data from the Energy Information Administration (EIA) showed an unexpected rise in U.S. crude stockpiles amid increase in production by major oil exporters, Reuters reports.

Benchmark Brent crude oil LCOc1 fell $1.07 to a low of $71.83 a barrel before recovering a little to trade around $71.90 by 1045 GMT. On Wednesday, Brent hit a three-month low of $71.19. U.S. light crude CLc1 was 85 cents lower at $67.91.

Brent has fallen almost 9 percent from last week’s high above $79 on emerging evidence of higher production from Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries, as well as Russia and the United States.

“The outlook remains negative,” said Robin Bieber, technical analyst at London brokerage PVM Oil Associates.

The U.S. Energy Information Administration said on Wednesday U.S. crude production had reached 11 million barrels per day (bpd) for the first time. The country has added nearly 1 million bpd in production since November, thanks to rapid increases in shale drilling.

Even higher U.S. production is likely, Rystad Energy said.

“We are still bullish on U.S. shale, though we expect to see a temporary plateau in 2019 due to the bottlenecks of pipelines and, indeed, manpower and drivers,” said Yosuke Uehara, vice-president at Rystad Energy.

A sharp jump in U.S. crude oil inventories also added to the bearish tone in the market. U.S. crude stocks rose by 5.8 million barrels last week, compared with a forecast for a decline of 3.6 million barrels.

U.S. gasoline inventories USOILG=ECI dropped by 3.2 million barrels last week, while distillate stockpiles USOILD=ECI, which include diesel and heating oil, declined by 371,000 barrels, the EIA said.

A Reuters poll taken before the data release had forecast gasoline stocks would be unchanged and distillate stockpiles would show a build of around 900,000 barrels.

Meanwhile, OPEC and non-OPEC producers cut oil output in June by 20 percent more than agreed levels, compared with 47 percent in May, two sources familiar with the matter told Reuters on Wednesday.

Saudi Arabia boosted production sharply last month, raising crude shipments to world markets by 390,000 bpd to 7.6 million bpd, Kpler tanker-tracking data showed. That was the biggest increase since the end of 2016, according to the International Energy Agency [IEA/M].

A Reuters survey of OPEC production showed Saudi output at a near record, up 700,000 bpd at 10.70 million bpd. [OPEC/O]