Futures dropped as much as 1.9 percent in New York, erasing Thursday’s 0.9 percent gain. US oil output last week increased by the most since January, according to a report from the Energy Information Administration. Crude inventories fell by 6.3 million barrels, more than triple the median forecast in a Bloomberg survey, while gasoline stockpiles decreased for a third week.
Oil’s longest rally this year faltered this week after Russia was said to oppose any proposal for deeper supply cuts by the Organization of Petroleum Exporting Countries and its partners. Crude in New York and London remain in a bear market amid concern rising global output will offset the OPEC-led curbs.
“Pressure is back on the market and that’s not surprising given the gains we’ve seen from the lows near $42,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “Oil is likely to trade sideways over the medium to longer term with lows around $40 and highs around $55 a barrel.”
West Texas Intermediate for August delivery lost as much as 88 cents to $44.64 a barrel on the New York Mercantile Exchange and was at $44.94 as of 1:05 p.m. in Hong Kong. Total volume traded was about 61 percent above the 100-day average. The contract gained 39 cents to $45.52 Thursday, rebounding from the biggest loss in four weeks. Prices are down 2.4 percent this week.
Brent for September settlement lost as much as 87 cents, or 1.8 percent, to $47.24 a barrel on the London-based ICE Futures Europe exchange. The contract added 32 cents to $48.11 on Thursday. Prices are down 0.8 percent this week. The global benchmark traded at a premium of $2.39 to September WTI.
US crude production increased by 88,000 barrels a day last week to 9.34 million, the EIA said in a report Thursday. Output had slid by 100,000 barrels a day through June 23 amid field maintenance in Alaska and the impact of tropical storm Cindy. Gasoline stockpiles fell by 3.7 million barrels.
Russian refiners will halt an average 940,000 barrels a day of capacity in September, the most in 21 months, according to the Energy Ministry.