OPEC May output highest since January

USA crude futures fell 4.6 percent, or $2.23 a barrel, to $45.96 a barrel, as of 11:18 a.m. EDT (1518 GMT).

Brent crude futures, the global benchmark, were trading down 0.84 per cent at $49.70 a barrel at the time of publishing.

Commercial crude inventories in the U.S. rose 3.3 million barrels, or 0.6 percent, to 513.2 million barrels for the week ending June 2, the U.S. Energy Information Administration (EIA) said earlier.

The Energy Information Administration reported on Wednesday that USA crude stockpiles climbed 3.3M barrels in the week ended June 2, following the preceding week's drop of 6.4M barrels. De facto OPEC leader Saudi Arabia and the United Arab Emirates have cut diplomatic ties with Doha. Brent is nearly 8 per cent below it levels on May 25, when an OPEC-led policy to cut oil output was extended to cover the first quarter of 2018. Forecasters had predicted a drop of 3.5 million barrels.

Domestic crude oil production in the States declined by 24,000 barrels per day last week.

"“It's about total stocks, crude and products, because that's what the world wants to see, that's what OPEC wants to see", Michael Wittner, head of commodities research at Societe Generale SA in NY, said by telephone.

Oil fell for a second day on Thursday to hit one-month lows after an unexpected surge in US inventories and the return of more Nigerian crude aggravated investor concerns about an already oversupplied market.

Iraq, which continues to produce above its output quota, saw its production rise by 70,000 barrels per day to 4.43 million barrels per day in May.

"Markets were already anxious about oversupply concerns after United States oil rigs lifted for 20 consecutive weeks, the longest streak in at least 30 years", he says.

With oil production of about 620,000 barrels per day (bpd), Qatar is one of the smallest crude producers in the Organization of the Petroleum Exporting Countries, but some investors fear tension within the cartel could weaken its agreement to hold back production in order to prop up prices.

The bearish report represents the first crude inventory build in several weeks and lends credit to recent sentiment over US shale production rising at a pace that could in part offset a production cut from the Organization of the Petroleum Exporting Countries. USA benchmark futures have slid more than 11 per cent in ten days of trading.

  • Zachary Reyes