Oil prices fell on Thursday as a build in U.S. crude inventories and record Saudi Arabian production reinforced fears of a persistent supply overhang that will last well into next year and keep weighing on markets.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading at $41.59 per barrel at 0650 GMT, down 12 cents from their last settlement.
International Brent crude futures LCOc1 were at $43.95 a barrel, down 10 cents.
Oil fell sharply after data from the U.S. Energy Information Administration <EIA/S> showed crude inventories rose 1.1 million barrels in the week ended Aug. 5. Analysts polled by Reuters had expected a 1.0 million-barrel crude draw instead. [EIA/S]
“Crude oil stocks rose 1.06 million barrels to 523.6 million barrels. The unexpected rise was driven by reduced operating rates at refineries, which fell 1.1 percent to 92.2 percent of capacity,” ANZ bank said on Thursday.
“Bearish supply-side news also weighed on the market, with Saudi Arabia reporting a record 10.67 million barrels per day (bpd) production in July,” it added.
Overall production from the Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader, also increased, boosted by producers such as Iraq and Iran, who offset the impact of militant attacks in Nigeria.
Based on figures OPEC collects from secondary sources, the organization pumped 33.11 million bpd in July, up 46,000 bpd from June.
OPEC expects demand for its crude in 2017 to average 33.01 million bpd, suggesting a supply surplus of 100,000 bpd if OPEC keeps output steady.
Matt Stanley, a fuel broker at Freight Investor Services in Dubai, said he expected crude prices to “be stuck in a range between $40 and $45 (per barrel) for a while.”