LONDON (Reuters) – Oil prices were on track for sharp weekly declines on Friday as surging U.S. output countered production losses in sanctions-hit Iran and Venezuela.
Brent crude oil futures were at $70.47 a barrel at 1115 GMT, down 28 cents and set for their first weekly loss after five weeks of gains.
U.S. West Texas Intermediate (WTI) crude futures were down 6 cents at $61.75, poised for a second straight weekly decline.
“Even with deep losses in supply from Iran and Venezuela, as well as a few other countries around the world, OPEC+ will still need to hold back production to balance the market,” SEB analyst Bjarne Schieldrop said in a note, adding that this is a reflection of the ongoing output growth in the United States.
U.S. crude oil production reached a record 12.3 million barrels per day (bpd) last week, rising by about 2 million bpd over the past year.
Exports of U.S. crude broke through 3 million bpd for the first time this year, according to data from the Energy Information Administration.
Graphic: U.S. crude oil production – tmsnrt.rs/2VFPX81
Rising U.S. oil production has helped to offset some of the disruption as U.S. sanctions against Iran and Venezuela have added to supply cuts led by the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+.
Production from Saudi Arabia could edge higher in June to meet domestic demand for power generation, though output will remain within its quota in the supply pact, sources familiar with the kingdom’s policy said.
The world’s top crude exporter is expected to produce about 10 million bpd in May, slightly higher than April but still below its 10.3 million bpd quota under the OPEC-led deal, industry sources said.
Traders said that prices were also pressured by Russia resuming supply of clean oil through the Druzhba pipeline towards western Europe after several countries halted imports last week because of contamination.
Poland, Hungary and the Czech Republic are offering their domestic refiners about 8 million barrels of oil from strategic reserves after supplies from the Druzhba pipeline were halted, industry sources said on Friday.
In the United States, analysts say supply will rise further as its export infrastructure is improved.
“One of the things that we can see in the near future is the de-bottlenecking of the Permian basin in the U.S. through new pipelines and export capacity,” said Will Hobbs, chief investment officer for Barclays Investment Solutions.
“This will connect the world’s largest shale basin to the global oil market.”
Additional reporting by Henning Gloystein in Singapore; Editing by David Goodman and Susan Fenton