Investing.com - Oil prices posted their first weekly loss in five weeks after settling lower for the second straight session on Friday, as traders fretted over a sharp rebound in U.S. production
U.S. West Texas Intermediate (WTI) crude futures for March delivery shed 58 cents, or around 0.9%, to end at $63.31 a barrel, its lowest level since Jan. 9. The U.S. benchmark reached a three-year high of $64.89 on Tuesday.
Meanwhile, March Brent crude futures, the benchmark for oil prices outside the U.S., slumped 70 cents, or roughly 1%, to settle at $68.61 a barrel by close of trade. The contract touched $70.37 on Monday, its best level since Dec. 2014.
For the week, WTI crude fell roughly 1.5%, the largest such loss since early December, while Brent was down about 1.8%, its largest weekly drop since early October, as investors weighed the impact of rising U.S. production on OPEC’s efforts to rid the market of excess supplies.
The International Energy Agency (IEA), in its monthly report Friday, warned that rapidly increasing production in the United States would offset a raft of positive factors supporting oil prices including ongoing OPEC output cuts.
The IEA said it expects U.S. output levels to soon exceed 10 million barrels per day (bpd), overtaking OPEC behemoth Saudi Arabia and rivaling Russia. U.S. crude production stood at 9.75 million bpd on Jan. 12, data from the Energy Information Administration showed.
Oil prices have added around 10% since early December, benefiting from production cut efforts led by the Organization of the Petroleum Exporting Countries and Russia. The producers agreed in December to extend current oil output cuts until the end of 2018.
The deal to cut oil output by 1.8 million barrels a day (bpd) was adopted last winter by OPEC, Russia and nine other global producers. The agreement was due to end in March 2018, having already been extended once.
However, analysts and traders have warned that the recent rally could encourage U.S. shale oil producers to ramp up production as they look to take advantage of higher prices.
Among other energy contracts, February gasoline futures declined 1.9 cents, or 1.1%, to end at $1.863 a gallon on Friday. It still notched a weekly gain of about 0.8%.
Heating oil for February inched down 0.3 cents, or 0.2%, to $2.058 a gallon, posting a weekly loss of around 1.3%.
Meanwhile, natural gas futures edged down by 0.1% to $3.185 per million British thermal units. It lost about 0.5% for the week.
In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to further weigh what the impact of recent storm activity was on supply and demand.