Oil prices dip as US crude output hits record 12 million barrels per day

The Hess Stampede Oil Platform Departs From Kiewit Offshore. (Bloomberg pic)

SINGAPORE: Oil prices fell on Friday after the United States reported its crude output hit a record 12 million barrels per day (bpd), undermining efforts by Middle East dominated producer club Opec to withhold supply and tighten global markets.

US West Texas Intermediate (WTI) crude oil futures were at US$56.85 per barrel at 0010 GMT, down 11 cents, or 0.2 percent, from their last settlement.

International Brent crude futures had yet to trade.

US crude oil production reached 12 million barrels per day (bpd) for the first time last week, the Energy Information Administration (EIA) said on Thursday in a weekly report.

That means US crude output has soared by almost 2.5 million bpd since the start of 2018, and by a whopping 5 million bpd since 2013. America is the only country to reach 12 million bpd of production.

As output surges, US oil stocks are also rising.

US commercial crude oil inventories rose by 3.7 million barrels in the week ending Feb. 15, to 454.5 million barrels, the EIA said.

Analysts say US oil firms will export more oil to sell off surplus stocks.

“The continued surge in US production stands as a bearish dynamic for market prices, especially as increasing volumes get sold abroad in a direct challenge to Saudi Arabia and Russia,” said John Kilduff, partner at Again Capital in New York.

For now, at least, the price dips have halted a rally that pushed crude to 2019 highs this week amid supply cuts led by the Organisation of the Petroleum Exporting Countries (Opec).

Opec and some non-affiliated producers such as Russia agreed late last year to cut output by 1.2 million bpd to prevent a large supply overhang from growing.

Another price driver has been US sanctions against oil exporters Iran and Venezuela.