Oil prices fell on Thursday as US crude production neared an unprecedented 12 million barrels per day (bpd) amid worries about weakening demand, particularly in light of the trade dispute between the United States and China.
Brent crude oil futures were down 44 cents at $60.88 a barrel by 1035 GMT, while US crude futures fell by 53 cents to $51.78 a barrel.
The price of oil has recovered by some 22 percent since hitting an 18-month low in late December, but investors appear loath to push crude much higher without evidence that relations between Washington and Beijing are improving, analysts said.
“Brent needs to move past $62 before we can talk about $65,” BNP Paribas head of commodities Harry Tchilingurian told the Reuters Global Oil Forum.
“From there, the door will be open to target $70, (if) we do not have negative news emerging around US-China trade talks that caused high levels of angst and de-risking last December.”
Skyrocketing US crude output, which neared a record 12 million bpd in early January, is fuelling some of the concern among traders and investors that growth in global supply this year will outpace demand.
In response to the drop in price in the second half of last year, the Organization of the Petroleum Exporting Countries and non-members such as Russia and Oman will cut production by a joint 1.2 million bpd this year.
US output has soared by 2.4 million bpd since January 2018 and stockpiles of crude and refined products have risen sharply, according to the US Energy Information Administration.
“While (US crude) inventories fell slightly more than expected (last week), there was a large build in gasoline inventories. This stoked fears of weak demand in the US,” ANZ Bank said in a note.
Norbert Ruecker, head of commodity research at Swiss bank Julius Baer, said “the United States is moving forward towards energy independence and is set to become a petroleum net exporter next year thanks to rising shale output”.