U.S. oil prices fell on Thursday, June 11 as traders took profits from the past two days of gains, turning bearish after supply concerns threatened to end the recovery in energy prices.
West Texas Intermediate, a popular benchmark of U.S. energy prices, settled down $0.66, or 1.07%, at $60.77 per barrel. Brent crude oil for July was down $0.60 to $66.40 per barrel.
The drop came after the International Energy Agency (IEA) said this year’s price rally is under threat as one of the Organization of Petroleum Countries’ (OPEC) biggest members pumps out record amounts of crude oil. Previously, Saudi Arabia has said it would maintain its current level of production for at least the next six months, waiting until energy prices have had a chance to recover. In today’s report, however, the IEA speculated that the country would ramp up oil output to match growing global energy demand.
OPEC supply edged up, the highest rate since August 2012. Saudi Arabia, Iraq, and the United Arab Emirates pumped at record monthly rates to keep output at more than one million barrels per day.
The report also noted that other OPEC members have announced plans to ramp up production. Earlier in the week, Iran’s oil minister Bijan Zanganeh said his nation would increase production by one million barrels a day within months of economic sanctions against the country being lifted. Some of the cartel’s biggest producers—including Iraq and the United Arab Emirates—have also kept output at more than one million barrels per day above OPEC’s official supply target for three months in a row.
The news is disappointing for energy bulls. Previously, economists believed oil production would remain flat for the rest of the year, putting a floor underneath prices. Today’s report pulls that timetable forward, indicating traders will likely have to brace for increasing supplies of crude oil much sooner than expected.
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