Oil Extends Biggest Drop in Two Months as Surging Shale Weighs

Oil fell for a fifth day, weighed down by surging U.S. output.

Futures dropped as much as 1.2 percent in New York, extending Wednesday’s biggest loss in two months. Government data showed U.S. crude production jumped to a record 10.25 million barrels a day last week. The global Brent benchmark slipped below $65 for the first time since late December.

The U.S. continues to be the biggest obstacle to efforts by the Organization of Petroleum Exporting Countries to end a global oversupply. American production has now eclipsed Saudi Arabia’s output, and Citigroup Inc. expects it to breach 11 million barrels a day by the middle of this year, several months earlier than the U.S. government’s own forecast. The Bloomberg Dollar Spot index has increased in February after three months of declines.

“Supply looks quite healthy and that’s taking the edge off oil prices,” said Nitesh Shah, a commodities analyst at ETF Securities in London. “A few of the catalysts that held up prices in January are fading away.”

West Texas Intermediate for March delivery fell 28 cents to $61.51 a barrel on the New York Mercantile Exchange at 9:02 a.m. local time. Total volume traded was about 36 percent above the 100-day average. Prices are heading toward their longest stretch of declines since April.

Brent for April settlement was 44 cents lower at $65.07 a barrel on the London-based ICE Futures Europe exchange, and traded at a $3.75 premium to WTI for the same month.

U.S. oil output increased for a fourth week, Energy Information Administration data showed on Wednesday. Crude in the nation’s storage tanks and terminals increased by 1.9 million barrels, while gasoline and distillate stockpiles also expanded.

“U.S. crude production should keep hitting new highs throughout 2018,” Citigroup analysts including Ed Morse wrote in a Feb. 7 note.

Other oil-market news:

The North Sea’s Forties Pipeline System — one of the world’s most important crude oil conduits — resumed overnight after a short halt, coming on the heels of a more significant stoppage in December. China’s crude imports surged to a record 9.61 million barrels a day in January as independent refiners boosted shipments after the government expanded the amount of overseas purchases they can make. Total SA signaled growing confidence that the oil-industry slump is ending by pledging to raise its dividend and buy back shares in the coming years. DNO ASA plans to increase investments in Iraqi Kurdistan by 50 percent this year after the region’s semi-autonomous government made more regular payments for crude exports.