Oil prices drop on higher U.S. crude stockpiles, record production

May 3 (UPI) — Oil prices declined Thursday on reports of increased U.S. crude inventories and record production in the nation.

Brent crude oil futures for July declined 55 cents to $72.82 per barrel at 10 a.m.

U.S. West Texas Intermediate for June were trading down 52 cents at $67.41 per barrel around 10 a.m.

On Wednesday, the U.S. Energy Information Administration reported a 6.2-million-barrel increase in U.S. crude inventories. At 436 million barrels so far this year, U.S. crude oil inventories are in the lower half of the average range.

Oil refinery imports averaged about 16.6 million barrels per day during the week ending April 27, which was 60,000 barrels per day less than the previous week’s average, with refineries operating at 91.1 percent of capacity.

U.S. oil production averaged 10.6 million barrels per day, a 14.1 percent increase from the same period last year. The United States is ahead of Saudi Arabia, the biggest OPEC producer, but behind Russia, which reports production of around 11 million barrels per day.

On Wednesday, state-owned producer Saudi Aramco raised the June price for its Arab light grade for Asian customers to a premium of $1.90 a barrel compared with the Oman/Dubai average. This is 70 cents higher than last month.

“Sellers are regaining pricing power,” Amrita Sen, chief oil analyst at Energy Aspects, told the Financial Times. “Refineries will be coming out of their maintenance period in June and buying up more crude in tight market, which means producers can start commanding higher prices.”

Markets are awaiting the May 12 deadline when President Donald Trump must decide whether to withdraw from the 2015 Iran nuclear deal or once again waive sanctions levied before the agreement. The deal, which Trump has called “terrible,” was approved by the United States, Britain, Russia, France, China, Germany and the European Union.

On Wednesday, Continental Resources of Oklahoma City, reported first quarter net income of $233.9 million, compared with $469,000 for the same period last year when oil prices plummeted. First-quarter production totaled 25.9 million barrels of oil equivalent, a 37 percent increase over the same period last year.

“Our first quarter results show our 2018 breakout year is off to a strong start,” Harold Hamm, chairman and chief executive officer of the company, said in a statement. “We are breaking away from our peers and capitalizing on decades of exploration success and operational achievements.”

On Thursday, the Petroleum Safety Authority announced the results of its investigation of a fatal accident on Dec. 7 on Maersk Interceptor, where one person was killed and another seriously injured in the Norwegian North Sea.

The agency noted several breaches of regulations, and said the direct cause of the incident was that a lifting sling broke because it was overloaded. Maersk has been given until May 31 to address nonconformities, including education and training for workers, design of lifting equipment and use of facilities and equipment.