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Oil prices dipped on Thursday after US crude inventories increased to their highest level since December 2017 amid concerns of an emerging global glut, although an expected supply cut by producer cartel OPEC prevented further drops.
US West Texas Intermediate (WTI) crude futures, were at $53.38 per barrel at 0141 GMT, 25 cents, or 0.5 per cent below their last settlement.
Front-month Brent crude oil futures were at $63.28 per barrel, down 20 cents, or 0.3 per cent, from their last close.
US commercial crude oil inventories rose by 4.9 million barrels to 446.91 million barrels last week, the Energy Information Administration (EIA) said in a weekly report on Wednesday. That was the highest level since December last year.
US crude oil production remained at a record 11.7 million barrels per day (bpd), the EIA said.
“US inventory data...continued to show significant supply builds, which comes on the back of sustained record US crude oil production,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
Some analysts have warned that despite high global production, oil markets have little spare capacity to handle unforeseen supply disruptions.
However, Innes said that once US pipeline bottlenecks were alleviated, which he said he expected in 2019, “the entire notion of a tight global spare capacity argument goes down the well”.
Fearing a glut, the Middle East-dominated producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) is considering supply cuts when it next meets on December 6, although some members, like Iran, are expected to resist any voluntary reductions.
“While there is talk that OPEC plus Russia may again agree to a production cut, the concern is that not all relevant parties will be able to come to an agreement,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.
“Saudi Arabia has hinted at a unilateral cut, but it will want to be careful about annoying the US given that President Trump has been vocal about his desire for lower oil prices,” he added.
Trump on Wednesday praised Saudi Arabia over recent oil prices and called for prices to go even lower.
“Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy!... Thank you to Saudi Arabia, but let’s go lower!” Trump tweeted.