Steady gains in U.S. crude oil inventories, coupled with an increase in exports from a key OPEC member, sent oil prices into deep red territory early Thursday.
The U.S. Energy Information Administration reported commercial crude oil stocks increased 1.5 million barrels for the week ending Feb. 24 to reach a record high. Stocks have been building for most of the year, though recent movements may be skewed by refiners planning to shift to a summer blend of consumer fuels.
U.S. shale oil production is proving more resilient to lower crude oil prices than expected and EIA reports total domestic crude oil production edged up slightly from the previous week to 9.03 million barrels per day, with inland gains reported in both shale and in Alaska.
Meanwhile, Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said in an emailed report that after two weeks of record highs, U.S. crude oil exports are down almost 40 percent to 700,000 barrels per day.
“U.S. storage tanks are being filled with Saudi crude,” Jakob said.
Saudi Arabia is leading members of the Organization of Petroleum Exporting Countries in terms of managed decline efforts aimed at offsetting supply concerns on the global market. Overall, OPEC compliance with a managed decline agreement is around 90 percent, though recent data compiled by Bloomberg News shows Iraq sent about 1 percent more crude oil to the market than it did in January.
The price for Brent crude oil was down 1.4 percent about a half hour before the start of trading in New York to $55.55 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, was lower than the previous close by 1.5 percent at $53.01 per barrel.
Outside of OPEC, Russian oil producer Lukoil reported its total production for last year was lower than 2015 by about 9 percent. Excluding its work in Iraq, where production declined substantially, the company said output during the fourth quarter, when major players were negotiating the managed declines, was up about 2.5 percent.
Crude oil prices have moved in a narrow band around $55 per barrel for most of the year. Moody’s Investors Service said this week it was maintaining a forecast for both Brent and WTI at between $40 and $60 per barrel.