LONDON: Oil futures fell on Thursday, with U.S. crude hitting its lowest price in more than two weeks as the country’s crude stocks reached yet another record high, renewing concerns about global oversupply.
The increase in U.S. inventories came despite seasonal refinery utilisation hitting an 11-year high, while a rise in the dollar .DXY put further pressure on oil prices.
Brent crude futures LCOc1 fell 45 cents to $38.81 a barrel as of 0823 GMT.
The front-month contract for U.S. crude futures CLc1 was down 65 cents at $37.67 a barrel, after dropping to $37.57, the lowest since March 16.
“The door is open for lower prices,” said Hamza Khan, head of commodity strategy with ING. “There’s a backlog of oversupply that needs to be worked out of the system.”
U.S. crude stockpiles rose by 2.3 million barrels to 534.8 million barrels in the week to March 25, the seventh week at record highs, data from the U.S. government’s Energy Information Administration showed.
The increase was less than analysts’ expectations of a 3.3-million-barrel build after crude imports fell by 636,000 barrels per day (bpd) to 7.4 million bpd.
Crude prices have risen about 50 percent since mid-February on optimism over a proposal by several major oil-exporting countries to freeze production and signs of falling U.S. output.
Producers are meeting on April 17 in Qatar to discuss the plan to stabilise output at January’s levels.
In the past week, however, oil prices have started to track lower.
Despite the freeze proposal, OPEC crude output rose in March to 32.47 million bpd from 32.37 million bpd in February, according to a Reuters survey.
Iran is expected to add another half a million bpd of oil within a year, Fatih Birol, head of the International Energy Agency, told Reuters on Wednesday.
But elsewhere in Asia, the sustained weakness in oil prices has suppressed upstream oil and gas production, consultancy BMI Research said in a report on Thursday.
Weaker prices are “limiting opportunities to stem natural declines in ageing assets”, the report said.
China’s still-growing demand could help absorb the excess.
China is set to import 7.5 million bpd this year, overtaking the United States as the world’s biggest crude importer, a vice president of Unipec, the trading arm of Sinopec, told a seminar.