Oil hits lowest prices in six weeks on record US crude output

Oil hits lowest prices in six weeks on record US crude output”

Oil prices fell to their lowest in six weeks on Thursday after data showed USA crude output had reached record highs and the North Sea's largest crude pipeline reopened following an outage.

Brent futures LCOc1 were down 74 cents, or 1.1 percent, at $64.77 a barrel by 12:14 p.m. EST (1714 GMT), their lowest since December 22.

US crude inventories rose 1.9 million barrels in the week to February 2, to 420.25 million barrels.

The December shutdown helped contribute to a surge in oil prices, with Brent crude climbing to what was then a two year high at $64 per barrel. At that level, USA 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 Russian Federation, have cut production since January 2017 to force down global inventories, but these cuts have been somewhat offset by rising United States oil production.

OPEC and its partners made a decision to extend its production cuts till the end of 2018 in Vienna on November 30, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry. "Everybody is itching to produce more oil", said John Kilduff, partner at energy hedge fund Again Capital LLC in NY.

The FPS is a key infrastructure link for North Sea, with Forties crude being one of the grades that derive the global oil benchmark Dated Brent.

The Forties pipeline, which carries around a quarter of all North Sea crude oil output and roughly a third of Britain's total offshore natural gas production, shut down on Wednesday for the second time in two months, after a feed control valve closed at its Kinneil facility in Scotland.

"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.

World oil prices are falling, investors continue to win back forecasts of a record increase in production of raw material in the U.S.

At 10.25 million bpd, USA output is now higher than the previous 10.044 million bpd record from 1970 and above that of top exporter Saudi Arabia.

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