A combination of rising China-US trade tensions (which saw a big Wall Street sell-off on Friday night) and news that the number of drilling rigs looking for oil in the US hit a three year high last week, knocked global oil prices on Friday.
At the same time there was more confirmation that US oil production continues to grow strongly.
The weak March jobs report with just 103,000 new jobs created (and a steady jobless rate of 4.1%) didn’t help sentiment as sharemarkets were battered by President Trump’s escalation of his trade war with China, which in turn made sure it would not take a backward step.
In New York, West Texas Intermediate (WTI) futures for May delivery, fell $US1.48, or 2.3%, to end at $US62.06 a barrel. In Europe, June Brent crude lost $US1.22, or 1.8%, to close at $67.11 a barrel.
Both benchmarks crudes posted their lowest close since March 19. WTI fell 4.4% for the week, its biggest drop since the week ended February 9. Brent had a 3.2% weekly fall, its biggest since the week ended March 2.
Losses mounted after oil-field services firm Baker Hughes said the number of US oil rigs rose by 11 to 808, the highest number since March 2015. That underscored worries about rising US output. That sharp rise more than offset the pre-Easter fall in rig numbers.
While the Energy Information Administration (EIA) reported on Wednesday that US crude stockpiles fell by 4.6 million barrels last week—the biggest weekly decline since January, output still rose 27,000 barrels to 10.460 million barrels a day, with the cumulative daily average output figure up 12.8% from a year ago to 10.189 million barrels a day.
That’s 889,000 barrels a day above the annual average daily US crude oil production of 9.3 million barrels a day (b/d) in 2017.
That was an increase of 464,000 b/d from 2016 levels after declining by 551,000 b/d in 2016.
The EIA said November 2017, monthly US crude oil production reached 10.07 million b/d, the highest monthly level of crude oil production in history.
The EIA projects that US crude oil production will continue to grow in 2018 and 2019, averaging 10.7 million b/d and 11.3 million b/d, respectively.
