New York: Oil dropped from a five-month high in New York as surging Opec crude production is seen swelling global stockpiles.
Futures fell for the first time in four days after a Bloomberg survey showed the Organisation of Petroleum Exporting Countries boosted output in April. Production rose by 484,000 barrels to 33.217 million a day, the most in monthly data going back to 1989, the survey of oil companies, producers and analysts showed. Oil climbed 20 per cent in April, the biggest monthly gain in a year as the dollar tumbles and US crude output slips.
“The Opec production estimates are putting pressure on the market,” said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. “Iran is really ramping up production since sanctions were lifted in January. Supply is unrelenting.”
Oil has rebounded after slumping to the lowest since 2003 in February amid signs the global glut will ease as US output falls. While US production has slipped below 9 million barrels a day, crude stockpiles have continued to expand, climbing to the most since 1929, according to data from the Energy Information Administration.
West Texas Intermediate for June delivery fell 11 cents to settle at $45.92 a barrel on the New York Mercantile Exchange. The contract touched $46.78, the highest intraday price since Nov. 4. Futures climbed 5 per cent this week.
Brent for June settlement slipped 1 cent to $48.13 a barrel on the London-based ICE Futures Europe exchange. The contract expired on Friday. The more-active July future fell 40 cents to $47.37. The global benchmark crude closed at a $2.21 premium to WTI for June delivery.
Iranian output rose by 300,000 barrels a day to 3.5 million, the highest level since December 2011. Sanctions against the nation, which were strengthened in July 2012, were lifted in January. Iran is boosting production after penalties were removed upon completion of an agreement limiting its nuclear program.
WTI is up 20 per cent this month as the repercussions of tumbling oil prices and reduced spending by companies curb US production. US crude output declined to the lowest level since October 2014 and the dollar dropped. The number of active oil rigs fell to 332 this week, the least since November 2009, according to Baker Hughes Inc. The total is down to less than a fourth of the 2014 peak.
Persistent Fall
“We are now seeing a persistent fall in US crude production, which is the key to the market moving roughly into balance during the second half of the year,” said Mike Wittner, head of oil markets at Societe Generale SA in New York.
The Bloomberg Dollar Spot Index, which tracks the US currency versus 10 counterparts, fell as much as 0.7 per cent to the lowest level since May. A weak greenback bolsters the appeal of commodities priced in the currency as a store of value.
Gasoline futures for May delivery slipped 0.8 per cent to close at $1.5848 a gallon after earlier touching $1.6041, the highest since August 31. May diesel dropped 1.9 per cent to $1.3779 after reaching the highest level since November. The May gasoline and diesel contracts expired on Friday.
