Oil futures saw another drop Wednesday on a government report that shows there’s an increase in U.S. oil supplies and a record level of gas production.
The U.S. is packed with oil, and record production levels are meeting the increasing imports tide. According to the U.S. Department of Energy, oil stocks saw a 7.26 million barrel a day increase. Analysts had anticipated there would be a drop of 1.8 million barrels.
West Texas Intermediate (WTI) futures for February dropped lower after the report came out. The report showed there would be a 4.1 million barrel increase in gasoline, which is six times more than the anticipated amount. WTI dropped three percent to $55.40; Brent dropped under $60 a barrel once again.
According to Lipow Oil Associates President Andrew Lipow, refiners are generating their highest amount of gasoline – 9.92 million barrels a day. He said the second-highest amount of distillate fuel was also reported – 5.24 million barrels a day with the first being 5.26 million barrels a day in December 2013.
The Organization of Petroleum Exporting Countries said it would not reduce output level, trying to force higher-cost non-OPEC producers to cut back on their production. OPEC officials have seen oil prices drop since its November meeting. And, Ali al-Naimi, the Saudi oil minister, said during the energy conference in Abu Dhabi, that OPEC would keep its current output levels. He said the significant decline in prices is due to several factors:
- Little to no coordination with non-OPEC producers
- Speculators
- Misleading information
He said it was not in OPEC’s best interest to reduce production, regardless of the price. al-Naimi said the price is irrelevant.
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