Oil prices fell on Thursday after U.S. crude stockpiles surged to their highest levels in almost 17 months amid record production.
International benchmark Brent futures were at $71.57 per barrel at 0056 GMT, down 16 cents, or 0.2 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude oil futures were at $64.36 per barrel, down 25 cents, or 0.4 percent, from their previous settlement.
U.S. crude inventories rose 7 million barrels to 456.6 million barrels in the last week, their highest since November 2017, the Energy Information Administration said on Wednesday.
U.S. crude oil production remained at a record 12.2 million barrels per day (bpd), making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.
(GRAPHIC: U.S. oil production, storage & drilling levels, https://tmsnrt.rs/2HWNIqK)
Despite this growth in U.S. supply, global oil markets remain tight amid supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), U.S. sanctions on oil exporters Iran and Venezuela, and escalating fighting in Libya.
As a result, Brent and WTI have risen by around 30 and 40 percent respectively since the start of the year.
Venezuela’s oil output sank to a new long-term low last month due to U.S. sanctions and blackouts, with production plunging to 960,000 bpd in March, a drop of almost 500,000 bpd from February.
“Pressure to global supplies continues to mount because of sanctions-linked problems in Iran and Venezuela and rising geopolitical risk in Libya,” said Stephen Innes, head of trading at SPI Asset Management.
Beyond the short-term outlook for oil markets, a lot of attention is on the future of demand amid the rise of alternative fuels for transport.
“We believe global demand has another 10 million barrels bpd of growth, with over half from China,” Bernstein Energy said in a note on Thursday.
Current oil demand stands around 100 million bpd.
Bernstein said it expected oil demand to peak around 2030, but added that “we expect a long plateau rather than a sharp decline” in consumption after that.
“While no industry lasts forever, the age of oil is far from over,” Bernstein said.