Oil falls below $60 for first time this year after 8.5% drop this week

Oil prices fell for a sixth day on Friday, and were on track for their biggest weekly losses in 10 months, as record-high U.S. crude output added to concerns about a sharp rise in global supplies.

The drop came amid a rout in global equity markets sparked by inflation fears.

Brent futures were down $1.20, or 1.9 percent, at $63.61 a barrel by 10:44 a.m. ET (1544 GMT). On Thursday, Brent fell 1.1 percent to its lowest close since Dec. 20.

U.S. West Texas Intermediate (WTI) crude was down $1.18, or 1.9 percent, at $59.97 a barrel, falling below the $60 level for the first time in six weeks.

Brent was heading for a weekly loss of more than 7 percent, while WTI has declined 8.5 percent this week.Roger

Since this year’s high point in late January, Brent has fallen roughly 10 percent and WTI is down more than 8 percent.

“It has now become painfully clear for beleaguered oil bulls that the early-year rally was not justified,” PVM Oil Associates’ Stephen Brennock said in a note.

“In its place is a deepening price rout that has quashed any lingering pockets of optimism.” U.S. domestic crude production hit a record of 10.25 million barrels per day (bpd) for the most recent week, according to the U.S. Energy Information Administration (EIA), while an outage on a key oil pipeline in the North Sea proved short-lived.

OPEC member Iran also announced plans on Thursday to increase production within the next four years by at least 700,000 barrels a day, which Brennock said marked “a hat-trick of heartaches” for oil bulls.

“This will be a tall order as the spectre of fresh U.S. sanctions looms but nevertheless exacerbated the sell-off,” Brennock said.

U.S. production has overtaken the current output in Saudi Arabia, the biggest producer in the Organisation of  Petroleum Exporting Countries (OPEC).

The U.S. increases have complicated efforts by OPEC and other producers, including Russia, to balance global markets and force down excess global inventories by cutting output. The group extended the production cut deal, which began in January 2017, until the end of 2018.

As more U.S. oil is being exported, it is also challenging OPEC members’ market share in key regions such as Asia.

Source: Reuters