Oil declined for the first time in more than a week after U.S. government data showed an increase in crude stockpiles and production, and as the commodity tracked moves in the equity market.
Futures fell 0.4% in New York on Feb. 21. The Energy Information Administration reported nationwide crude stockpiles rose for a fifth straight week and production skyrocketed to 12 million barrels a day, a record-high. Crude’s moves also mirrored the S&P 500 Index, which dipped lower.
“We’re seeing a little stabilization in broad asset prices, whether it’s equities, which are a little off today. Commodities are lower as well,” said Brian Kessens, who helps manage $16 billion in energy assets at Tortoise in Leawood, Kan. The inventory report was “pretty spot on with what consensus was” and production is at “a new milestone.”
Oil has rallied above $57 a barrel this year in New York as OPEC and its allies began implementing output curbs as part of a joint agreement. Saudi Energy Minister Khalid Al-Falih said he expects markets to balance by April. Yet, the ongoing U.S.-China trade war has investors concerned about the outlook for global economic growth.
The EIA data showed that crude stockpiles rose 3.67 million barrels last week, while inventories at the Cushing, Okla., storage hub increased 3.41 million barrels, the largest build since March 2018. The increase in output is the first rise since the middle of January.
“U.S. crude production finally hit the 12 million barrel-a-day mark,” said Tariq Zahir, a commodity fund manager at Tyche Capital Advisor, “and we expect that number to increase in the weeks and months to come as new pipelines in the Permian are coming online.”