USA crude oil production rose to a record 124.4 million barrels per day (bpd) in the week to May 31, said the Energy Information Administration (EIA), which also showed that inventories increased by 6.771 million barrels in the week to May 31, compared with forecasts for a stockpile draw of 0.85 million barrels.
"Rising U.S. production is more than offsetting the efforts from the OPEC+ and if we add the negative effect a trade war could have on energy demand the result is lower prices", said Alfonso Esparza, senior analyst at futures brokerage OANDA. Oil prices have fallen sharply on fears about slowing global demand, but won a respite on Tuesday after a global stock market rally on hopes of a cut in USA interest rates.
Oil is teetering on the edge of a bear market after falling nearly 20% from a peak in late April as an aggressive US trade policy stokes fears that the global economy is headed for a sharp slowdown.
Weak growth is also putting pressure on the outlook for demand.
Brent crude futures rose $1.04, or 1.7%, to $61.67/Bbl Thursday.
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However, they had recovered strongly amid production curbs... A breakdown in trade talks between the USA and China and threats of new American tariffs against Mexico have stoked fears about a world economy that's already showing signs of weakness.
Meanwhile, weekly US oil production ticked up to an all-time high 12.4 million bpd, according to a preliminary reading from EIA. Demand is still seen at 100 million barrels per day on an average this year, according to reports from the U.S. Energy Information Administration.
The so-called OPEC+ alliance has been withholding supply since the start of the year in order to drain oversupply and prop up prices.
Ultimately, it is highly unlikely that conflict ever comes to bear, yet the continued posturing over a potential clash between the two sides remains a potential bullish scenario for crude prices.
In earlier comments, the minister had said he was unwilling to engage in a race to boost oil output to compensate for lower prices, saying a return to the situation that led to the price crash of 2014-2015 would be unacceptable.
The world's biggest oil trader, Vitol Group, said that it is expecting OPEC as well as its allies to broker a deal to cut oil production in the latter half of 2019.