Falling crude inventories in the United States supported stable oil market prices on Thursday. However, prices were capped by continuous uptick of output, fast approaching 10 million barrels per day (bpd). A level like this has only been surpassed by Russia and Saudi Arabia.
U.S. West Texas Intermediate (WTI) crude futures were at $58.12 per barrel, little changed from previous close.
The international benchmark for oil prices, Brent Crude futures were unmoved at $64.56 per barrel.
Both crude benchmarks received about 1 percent increase during their previous sessions. The rise was due to official data from the week leading to December 15. It showed a 6.5 million barrel drop in U.S. crude inventories to 436 million barrels, the lowest level since October 2015.
Nonetheless, there was another increase in the American oil production which went against the rise in the benchmarks. A rise in the gasoline stocks meanwhile indicated that the demand is slowing down.
Last week, U.S. crude production reached 9.79 million bpd. This has been its highest level since the early 1970s when the American output rose above 10 million bpd.
The recent output level brings it close to that of the top international producers Russia and Saudi Arabia. The top two countries produce 11 million and 10 million bpd respectively.
OPEC on the US output increase
Saudi Arabia energy minister Khalid al-Falih stated that it will take some time for them to reign in the global supply overhang. This was created by strong increase in the global production in years that led up to 2015.
“We expect the first few months of 2018 to be either flat or a build (in inventories) as it is typically the case with the seasonality with the oil market,” said Khalid al-Falih on Wednesday.
U.S. oil output being close to breaking through the 10 million bpd undermines the efforts headed by OPEC and Russia.
The Organization of the Petroleum Exporting Countries (OPEC), along with Russia and 13 other countries, aim to tighten the market by holding back the supply in 2017 throughout next year.
Saudi Arabia is the world’s top crude exporter and OPEC’s de-facto leader.
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