- Saudi Arabia cuts output, other OPEC members keep pumping
- Dollar hits June high, pressuring oil price
- US gasoline stocks build despite summer driving season
- IEA sees crude glut lasting despite strong demand
- Surging U.S. output further undermines OPEC cuts
Oil prices settled lower for a second straight day on Thursday, as the market was unable to rebound from Wednesday’s decline on the back of a surprise build in U.S. gasoline inventories and ongoing worries about heavy global supply.
The dollar rose to its highest in more than two weeks, further weighing on oil by making it more expensive for buyers using other currencies.
Still, Brent crude fell to a session low of $46.70 a barrel, its weakest since May 5 and near six-month lows. It settled down 8 cents at $46.92 a barrel.
U.S. crude settled down 27 cents at $44.46, after touching a six-month low of $44.32 a barrel.
Oil has slumped despite output cuts of 1.8 million barrels a day by the Organization of the Petroleum Exporting Countries and non-OPEC producers including Russia.
On May 25, the countries said they agreed to extend the cuts nine months through next March. Yet crude prices have slid about 12 percent since that day as other countries have boosted output.
Saudi Arabia’s oil exports are expected to fall below 7 million barrels per day this summer, according to industry sources familiar with the matter, and Russian oil exports were seen as broadly flat in the third quarter.
“Libya and Nigeria have brought more oil online and that’s really hindering” OPEC’s efforts, said Tariq Zahir, crude trader and managing member at Tyche Capital Advisors in New York.
Libya has seen major supply disruptions from protests and contract disputes, but this week the National Oil Company said production was resuming at key fields.
Recent U.S. economic figures, including retail sales, core inflation and industrial production have all been weak, raising concerns about the trajectory of the economy.
U.S. production is up 10 percent over the past year to 9.33 million bpd, close to top producers Russia and Saudi Arabia.
On Wednesday, crude prices fell nearly 4 percent after U.S. gasoline inventories rose unexpectedly and the International Energy Agency said growth in oil supply next year is expected to outpace demand even as global consumption exceeds 100 million barrels per day (bpd) for the first time.
Summer boosts gasoline demand from U.S. drivers, yet gasoline inventories rose 2.1 million barrels last week, 9 percent over the five-year average for this time of year, according to the U.S. Energy Information Administration (EIA).
Both Brent and U.S. crude have given up all the gains since the initial OPEC agreement in late November.
“I definitely think we’re in a new trading range,” said Tyche’s Zahir, “Unless you get some supply disruption, I think it’s going to be lower for longer.”
(Additional reporting by Christopher Johnson in London, Henning Gloystein in Singapore; Editing by Marguerita Choy, David Gregorio and Chris Reese)