LONDON: Oil prices fell for a sixth day on Friday, and were on track for their biggest weekly loss in 10 months, as record-high United States (US) 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 LCOc1 were down 81 cents at $64 a barrel by 1502 GMT. Earlier in the day, they fell as far as $63.70, the lowest since December 20.
US West Texas Intermediate (WTI) crude CLc1 was down 80 cents at $60.35 a barrel, after falling to as low as $60.07, its lowest since December 29.
Both contracts have fallen more than 9 per cent from this year’s high point in late January. Brent was heading for a weekly loss of nearly 7 per cent, its biggest since April, while WTI’s weekly decline of nearly 8 per cent is the steepest since March.
“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.”
US domestic crude production hit a record of 10.25 million barrels per day (bpd) for the most recent week, according to the US 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 US sanctions looms but nevertheless exacerbated the sell-off,” Brennock said.
US production gains have put it on track to overtake the current output in Saudi Arabia, the biggest producer in the Organisation of the Petroleum Exporting Countries (OPEC).
The US increases have complicated efforts by OPEC and other producers, including Russia, to 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.
An increase in US exports is also challenging OPEC members’ market share in key regions such as Asia.
“We think that surging supply and slowing demand growth will tip the market back into a surplus this year,” analysts at Capital Economics said in a note.