NEW YORK (Reuters) – Oil prices were mixed on Thursday with Brent paring losses and U.S. crude turning positive as a weak dollar and Saudi Arabia’s comments that OPEC and other producers were committed to their pact on cutting supplies outweighed record U.S. production and rising inventories.
Brent futures LCOc1 were down 25 cents, or 0.4 percent, at $64.11 a barrel by 2:10 p.m. EST (1910 GMT), while U.S. West Texas Intermediate crude CLc1 were up 48 cents, or 0.8 percent, at $61.08.
The premium of Brent over WTI WTCLc1-LCOc1 was near its lowest in six months.
“I’m surprised that oil prices are falling today given the weaker U.S. dollar. Currently, the direction of the dollar is having a bigger impact on oil prices than fundamentals,” said Rob Thummel, portfolio manager at energy investment manager Tortoise Energy.
The dollar .DXY was approaching the three-year low hit in late January. [USD/] A weaker dollar makes oil and other dollar-denominated commodities cheaper for holders of other currencies.
Oil had climbed on Wednesday and early on Thursday after Saudi Energy Minister Khalid al-Falih said OPEC would do better to leave the market tight than end the deal on cutting output too soon.
“Khalid al-Falih gave his strongest hint yet that exiting the current supply agreement is unlikely to be on the agenda this year,” said Tamas Varga of oil broker PVM.
Under the deal, the Organization of the Petroleum Exporting Countries agreed to cut output by 1.8 million barrels per day, representing almost 2 percent of global supply. The cuts started a year ago and will run until the end of 2018.
But the rebound in U.S. production, encouraged by the higher prices delivered by the OPEC-led cuts, is undermining efforts to curb supplies. The EIA expects U.S. production to top 11 million bpd in late 2018, a year earlier than projected last month. [EIA/M]
“Persistently high oil production in the United States, the country’s gasoline stocks at their highest level since March 2017, and a shrinking price premium of Brent over WTI crude portrays a bearish picture for oil prices,” said Abhishek Kumar, Senior Energy Analyst at Interfax Energy’s Global Gas Analytics.
U.S. crude output hit a record 10.27 million barrels per day last week, the Energy Information Administration (EIA) said on Wednesday, making it a bigger producer than Saudi Arabia. [EIA/S]
EIA also said crude inventories rose 1.8 million barrels in the week to Feb. 9, an increase that was less than analysts’ forecasts. Gasoline stocks, meanwhile, climbed by 3.6 million barrels, more than double the forecast.
Additional reporting by Henning Gloystein in Singapore and Alex Lawler in London; Editing by Marguerita Choy and Chris Reese