NEW YORK (Feb 9): Oil prices fell to their lowest in seven weeks on Thursday amid fears of rising global supplies after Iran announced plans to increase production and U.S. crude output hit record highs.
Brent futures fell 70 cents, or 1.1 percent, to settle at $64.81 a barrel, their lowest close since Dec. 20.
U.S. West Texas Intermediate (WTI) crude, meanwhile, was down 64 cents, or 1 percent, to settle at $61.15, its lowest close since Jan. 2.
Both benchmarks fell for the fifth straight day, the longest losing streak for Brent since November 2017 and for WTI since April 2017.
Brent futures have lost as much as 15 percent since hitting a four-year high above $71 in late January.
“Oil prices remain under pressure in today's trading session as market participants continue to digest yesterday's bearish oil inventories report," said Abhishek Kumar, Senior Energy Analyst at Interfax Energy’s Global Gas Analytics in London.
The U.S. Energy Information Administration (EIA) on Wednesday said crude production last week rose to a record high of 10.25 million barrels per day (bpd). At that level, U.S. production would overtake the current output in Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries.
OPEC and other producers, including Russia, have cut production since January 2017 to force down global inventories, but these cuts have been somewhat offset by rising U.S. oil production.
Oil prices were also pressured by an announcement from Iran that it is looking to boost production over the next four years.
“The Iranians are looking to increase production...despite their alleged adherence to the OPEC-Russia deal. Everybody is itching to produce more oil,” said John Kilduff, partner at energy hedge fund Again Capital LLC in New York.
Traders also noted the restart of the Forties pipeline in the North Sea, added to losses in crude prices.
The pipeline, which carries around a quarter of all North Sea crude output and roughly a third of Britain's offshore natural gas production, shut on Wednesday for the second time in two months after a valve closure at a Scottish facility.
"It is now clear that oil prices in late January were too high to keep the oil market balanced in the long term," Commerzbank analysts wrote. "This is because U.S. oil production is now rising so sharply that there is a risk of renewed oversupply if OPEC does not voluntarily renounce market share."
Earlier this week, the EIA projected U.S. production would rise to a record high annual average of 10.6 million bpd in 2018 and 11.2 million bpd in 2019, up from 9.3 million bpd in 2017.
The current all-time U.S. annual output peak was in 1970 at 9.6 million bpd, according to federal energy data.