Oil prices fell on Friday, reversing early gains as signs of weakening demand in China and surging U.S. output weighed on markets despite support from supply woes in Venezuela and OPEC’s production cuts, Reuters reported.
Brent crude futures LCOc1, the international benchmark for oil prices, were at $76.79 per barrel at 0654 GMT, down 53 cents, or 0.7 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 38 cents, or 0.6 percent, at $65.57 a barrel.
China’s May crude oil imports eased away from a record high hit the month before, customs data showed on Friday, with state-run refineries entering planned maintenance.
May shipments were 39.05 million tonnes, or 9.2 million barrels per day (bpd), according to the General Administration of Customs. That compared with 9.6 million bpd in April.
Further weighing on prices has been surging U.S. output C-OUT-T-EIA, which hit another record last week at 10.8 million bpd.
That’s a 28 percent gain in two years, or an average 2.3 percent growth rate per month since mid-2016. It puts the United States close to becoming the world’s biggest crude oil producer, edging nearer to the 11 million bpd churned out by Russia.
The surge in U.S. production has pulled down U.S. WTI crude into a steep discount versus Brent CL-LCO1=R to more than $11 per barrel, its steepest since 2015.
“This is occurring because of the rapid increase in production from U.S. shale coupled with the tightening of supplies elsewhere through the actions of OPEC and Russia,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.