Investing.com — Crude futures continued their steady decline on Friday in spite of a weaker dollar, as surging production among Opec members in July pushed supply at the world’s largest oil cartel to its highest level in seven years.
OPEC supply surged to 32.01 million barrels per day on the month, according to a Reuters survey, rising slightly from an upwardly revised total of 31.87 million bpd in June. Since roiling global energy markets in November with a strategic decision to boost its market share by leaving its production ceiling above 30 million bpd, OPEC supply has increased by more than 1.6 million bpd.
The latest supply build triggered a sell-off on both sides of the Atlantic, as both West Texas Intermediate and North Sea brent crude futures dipped by more than 2%. On the New York Mercantile Exchange, WTI crude for September delivery traded between $46.92 and $48.61, before closing at $47.13, down 1.39 or 2.85% on the session. For July, futures plunged more than 22% erasing all of their gains from the previous four months.
On the Intercontinental Exchange (ICE), brent crude for September delivery wavered between a range of $51.97 and $53.47 a barrel, before settling at $52.24, down 1.07 or 2.01% for the day. futures also fell precipitously in July, plunging by nearly 20% on the month.
The spread between the international and U.S. benchmarks of crude stood at $5.11, above Thursday’s level of $4.79 at the close.
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Elsewhere, oil services firm Baker Hughes (NYSE:) said in its weekly rig count on Friday that U.S. oil rigs last week increased by five to 664, its highest level since May. It came one week after an unexpected build by 21 rigs to 659. Earlier in the month, a draw that last for more than 25 consecutive weeks came to a halt following two straight weeks of builds. Last fall, the rig count peaked above 1,500.
The release of the July Reuters survey came days after a report surfaced from the Wall Street Journal that Saudi Arabia could slash crude output by 200,000 to 300,000 barrels a day, to roughly 10.3 million bpd as early as September. In June, the kingdom produced more than 10.6 million barrels a day, amounting to its highest level on record. The survey is based on shipping data and other energy statistics compiled by industry sources.
The , which measures the strength of the greenback, versus a basket of six other major currencies, fell to an intraday low of 96.38 before paring some of the losses in afternoon trading. Despite the losses, the index is still up more than 1.5% on the month.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.
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