Oil prices Down in Asia Morning, Under Pressure From U.S. Production

Investing.com – Oil prices were down Wednesday morning in Asia due to growing U.S. production and a strengthening dollar.

for April delivery were trading at $62.59 a barrel in Asia by 10:15pm ET, down 0.67%. futures for May delivery, traded in London, were down 0.53% at $66.17 per barrel.

Expectations for a weekly build-up in U.S. crude inventories and continued increase in U.S. oil production have brought oil prices down. Crude stockpiles rose by 933,000 barrels last week to 421.2 million barrels.

U.S production has surpassed 10 million barrels per day (bpd), an increase of more than 20% since mid-2016. International Energy Agency Executive Director Fatih Birol said on Tuesday that the U.S. will overtake Russia as the world’s largest oil producer by 2019.

In an effort to stabilize oil markets, OPEC has been curbing output by around 1.2 million bpd since January 2017, and the deal will run until the end of 2018.

While the effort has helped somewhat to support oil prices, the U.S. has continued to increase its oil production, filling the gap in supply created by OPEC and thus pushing prices down. In effect, the surging production in the U.S. is hampering OPEC attempts to ease the global oversupply.

Meanwhile, the U.S. currency is gaining strength in the wake of Fed Chairman Jerome Powell’s . The stronger dollar is further putting downward pressure on oil prices, as dollar-denominated oil is now more expensive for other countries to import.

However, oil markets remain well supported by strong global fundamentals. Demand continues to surge in Asia, particularly China, which emerged as a top buyer of U.S. crude last year.

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