Oil fell for a third day on Wednesday, under pressure from concern about rising U.S. production and how much it would hurt efforts by OPEC and its partners to control global supplies.
Brent crude futures fell 26 cents to $62.46 a barrel by 1028 GMT. The price has lost 11 percent since hitting a high above $71 in January. It has now wiped out all the 2018 gains.
U.S. West Texas Intermediate crude futures fell 40 cents to $58.79 a barrel.
The American Petroleum Institute (API) said on Tuesday that U.S. crude inventories rose by 3.9 million barrels in the week to Feb. 9, to reach 422.4 million.
That was largely due to soaring U.S. crude production, which has risen by more than 20 percent since mid-2016 to more than 10 million barrels per day (bpd), surpassing top exporter Saudi Arabia and closing in on Russia, the world’s biggest producer.
“API came in bearish and that’s impacting the markets this morning … It’s all very seasonal. It’s to be expected,” Natixis oil analyst Joel Hancock said.
“People are seeing this seasonal weakness in the U.S. as an expectation that perhaps demand growth will be slower,” he said, adding that the rally in the second half of 2017 and start of 2018 has been fueled by expectations for robust demand.
However, U.S. crude inventories are still set for their largest fall in the first quarter of the year in more than 20 years.
The Organization of the Petroleum Exporting Countries and its partners including Russia have curbed supply since January 2017 in a bid to drain global inventories.
The International Energy Agency on Tuesday raised its forecast for 2018 demand growth by 100,000 bpd to 1.4 million bpd, but said the rapid increase in global supply, particularly in the United States, could overtake consumption.
The physical markets are reflecting this concern. Prices for barrels of crude from the North Sea, Russia, the United States and Middle East have dropped to multi-month lows.
“Investors should not discount the caution signs that have been emerging,” investment bank RBC Capital Markets said.
“Pockets of oversupply have been emerging in the physical market,” the bank said in a note. “The tempering physical oil backdrop is … playing a central role in the recent price softness.”