OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange continued lower in early trade, reversing Wednesday contract gains, as analysts say market fears about global oil supplies are subsiding.
As prices for both crude oil benchmarks fell overnight through key contract support levels, West Texas Intermediate now stands within reach of its lowest price in since mid-June, while Brent crude values trade at three-month lows. Given recent price declines, the WTI-Brent spread, a key measure of WTI's export profitability versus international Brent, stands at $3.74 bbl, off more than 65% from recent $11.37 bbl contract spread highs seen the first week of June.
Wednesday’s Energy Information Administration report showed commercial crude stocks in the United States increased for the week ended July 13 by 5.8 million bbl, and reported stocks at Cushing, Oklahoma fell for a ninth consecutive week by 860,000 bbl.
EIA data also revealed U.S. crude oil output reached a record 11.0 million bpd driven by growing U.S. shale oil output, analysts say.
In global oil markets, Wednesday’s emergency a meeting of OPEC and non-OPEC members showed additional oil supplies were generated by increasing output from OPEC members Venezuela, Nigeria and Iraq, and non-OPEC members headed by Russia.
“OPEC said it's going to stick to production cuts at the moment," Phil Flynn, senior market analyst with Chicago-based Price Futures Group told DTN MarketWire, Wednesday. “They're holding together despite the upcoming November sanctions on Iran and have said that they won't dip below 100% compliance."
An overnight Reuters report quoting a secondary data source showed Saudi Arabia’s production rose sharply in June to 7.6 million bpd, a 390,000 bpd increase and the largest increase since the end of 2016. An independent Reuters survey of OPEC production indicated Saudi output up 700,000 bpd to 10.70 million And the JMMC announcement statement comes amid reports from the Energy Information Administration Wednesday showing U.S. oil production hit 11.0 million bpd for the week ended July 13, the highest ever. U.S. oil output is primarily being driven by increasing U.S. shale output, analysts say.
Near 9:00 AM ET, the NYMEX August WTI futures contract continued down 5 cents bbl to $68.71 bbl, while the September contract slipped 29 cents to $67.46 bbl.
ICE September Brent, was 50 cents lower at $72.40 bbl, a fresh three-month low. while the October contract dipped 47 cents to $72.52 bbl.
NYMEX August RBOB contracts were 1.41 cents gallon down at $2.0303 gallon, while the August ULSD contract declined 1.34 cents gallon to $2.0773 gallon.
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