Surging US supply weighs on oil

Singapore — Oil prices fell on Thursday, pressured as US crude stockpiles surged to their highest levels in almost 17 months amid record production and as economic concerns cast doubt over growth in demand for fuel.

International benchmark Brent futures were at $71.44 per barrel at 4.24am GMT, down 29 cents, or 0.4%, from their last close.

US West Texas Intermediate (WTI) crude oil futures were at $64.28 per barrel, down 33 cents, or 0.5%, from their previous settlement.

US crude inventories rose 7-million barrels to 456.6-million barrels in the last week, their highest since November 2017, the Energy Information Administration said on Wednesday.

US crude oil production remained at a record 12.2-million barrels per day (bpd), making the US the world’s biggest oil producer ahead of Russia and Saudi Arabia.

There are also concerns that an economic slowdown will soon dent fuel consumption after the IMF this week downgraded its global growth forecast to the lowest in a decade.

Despite the surge in US supply and the economic concerns, global oil markets remain tight amid supply cuts led by the Organisation of the Petroleum Exporting Countries (Opec), US sanctions on oil exporters Iran and Venezuela, and escalating fighting in Libya.

“[Oil markets will remain tight] as long as Saudi Arabia continues to back the production cut deal as aggressively as it has done so far,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Brent and WTI have risen by about 30% and 40% respectively since the start of 2019.