Oil prices declined Friday after reports showed U.S. oil production is rising again and drilling activity is increasing, which could help keep global supplies healthy even as Iran oil exports fall due to sanctions.
Light, sweet crude for October delivery ended 0.6% lower at $69.80 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, fell 0.5% to $77.42 a barrel.
Despite the modest losses Friday, oil prices have now risen on a weekly basis for the past two weeks. Driving those gains have been reports that U.S. oil sanctions on Iran, which don’t officially take effect until November, are already curtailing Tehran’s exports.
“The market has moved higher for the second week in a row on Iran and stories circulating about the supply overhang diminishing,” said Dominick Chirichella, an analyst at the Energy Management Institute.
Still, data released Friday afternoon softened that supply outlook, as it showed U.S. oil producers are sending ever-more barrels of crude oil into the global market.
U.S. oil production jumped to 10.7 million barrels a day in June, the U.S. Energy Information Administration said in a monthly report Friday. Output in May had fallen slightly to 10.4 million barrels a day, so June’s number re-establishes a two-year-long upward trend, and puts U.S. output on target to reach a record 11 million barrels a day before the end of this year.
Also Friday, the Baker Hughes Rig Count showed the number of active oil rigs in the U.S. rose by two, to 862. That suggests drilling activity in the American oil patch remains healthy despite some concerns that a shortage of pipelines in places like West Texas is hampering efforts to move crude oil from the fields to refiners or exporters on the Gulf of Mexico coast.
Iran’s oil shipments are already declining at a faster-than-expected pace ahead of U.S. sanctions set to be reimposed in November. The Trump administration exited from a 2015 accord to curb Iran’s nuclear program in May, setting the stage for an economic blockade against the Middle Eastern country and its oil exports.
Officials at the state-run National Iranian Oil Co. provisionally expect crude shipments to drop to about 1.5 million barrels a day in September, down from around 2.3 million barrels a day in June, according to people familiar with the matter.
Traders also sold oil Friday over concerns related to trade disputes the U.S. has in several regions, including the European Union and China.
Auto shares traded lower after reports President Trump rejected the EU’s offer to eliminate car tariffs. Meanwhile, Washington is set to move ahead with tariffs on $200 billion more of Chinese imports as early as next week.
Experts worried the simmering commercial fights could boil over, slowing economic growth and curbing consumer appetite for oil.
Among refined products, gasoline futures for September delivery ended virtually unchanged at $2.1437 a gallon. Diesel futures fell 0.3%, to $2.2413 a gallon.
Write to Dan Molinski at [email protected] and Neanda Salvaterra at [email protected]