US crude inventories, tightening global supply in focus

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An idled pump jack, once used to extract crude oil from the ground, and a tank battery, used to temporarily store freshly-pumped crude, rust in a farmer’s field near Ridgway, Ill., Jan. 21, 2015.

Oil prices dipped on Thursday, with Brent edging away from the psychologically important $70 level after easing in the previous session on data showing a surprise build in U.S. inventories.

Brent futures eased 2 cents to $69.29 by 0100 GMT. On Wednesday, Brent dipped 6 cents, after touching $69.96, the highest since Nov. 12, when it last traded above $70.

U.S. West Texas Intermediate (WTI) crude was down 14 cents, or 0.2 percent, at $62.34 a barrel. The contract fell 12 cents in the previous session after briefly hitting $62.99, also the highest since November.

Crude oil inventories in the United States rose by 7.2 million barrels last week, as net imports climbed, the Energy Information Administration said on Wednesday. Analysts had forecast a decrease of 425,000 barrels.

The increase “encouraged a wave of profit taking as traders are opting to take some chips off the table ahead of the psychologically significant $70 per barrel for prompt Brent,” Stephen Innes, head of trading and market strategy at SPI Asset Management, said in a note.

The $70 level “could prove to be the real litmus test for this current rally,” he added.

Brent, the global benchmark, is up nearly 30 percent this year, while WTI has gained nearly 40 percent, with prices underpinned by tightening global supply and signs of demand picking up.

U.S. crude production climbed 100,000 barrels per day (bpd) to a record 12.2 million bpd, after hovering around 12-12.1 million bpd since mid-February, according to the data from the Energy Information Administration.

Refined fuel inventories fell more than expected, with gasoline drawing down for a seventh straight week, as refining rates remained low, the data from the statistical arm of the Department of Energy showed.