Oil futures dropped Thursday, with U.S. and global benchmark prices posting their lowest settlements since March, after U.S. government data revealed a weekly decline in domestic crude stockpiles that was much less than expected.
The data also showed a further increase in production that was already in record territory.
West Texas Intermediate crude for July delivery CLN19, -0.97% on the New York Mercantile Exchange lost $2.22, or 3.8%, to settle at $56.59 a barrel. Front-month prices settled at their lowest since March 8 and trade down by more than 11% for May so far, according to Dow Jones Market Data.
Global benchmark July Brent BRNN19, -0.88% fell $2.58, or 3.7%, to $66.87 a barrel on ICE Futures Europe, the lowest finish since March 12. The contract expires at the settlement on Friday. Front-month contract prices have lost more than 8% month to date.
The Energy Information Administration on Thursday reported that U.S. crude supplies edged lower by 300,000 barrels for the week ended May 24. That marked the first weekly decline in three weeks, but it was significantly less than the 1.4 million-barrel declined expected by analysts polled by S&P Global Platts, on average. The American Petroleum Institute on Wednesday also reported a much bigger decrease of 5.3 million barrels. Data were delayed by a day because of Monday’s Memorial Day holiday.
The EIA also estimated that domestic production rose by 100,000 barrels to 12.3 million barrels a day last week.
Domestic production returned to the all-time high, and that “remains a headwind for prices, albeit a weakening one as the uptrend in production has effectively stalled so far in Q2,” said Tyler Richey, co-editor at Sevens Report Research.
He pointed out that data showed U.S. net imports of crude oil dipped back below 4 million barrels a day for