Oil futures declined on Friday as U.S. crude inventory levels reached record highs stoking fresh concerns of unwanted oil continuing to flood the market.
U.S. crude stockpiles grew by 2.1 million barrels last week, peaking at 504.1 million barrels according to data from the U.S. Energy Information Administration.
U.S. crude (CLc1) fell $0.32 to $30.45 a barrel, after rising $0.11 in early Asian trading, while oil benchmark Brent futures (LCOc1) declined 0.2% to $34.20 a barrel on London’s ICE Futures exchange. Meanwhile, in the New York Mercantile Exchange, West Texas Intermediate futures (LCOJ6) went down 0.5% at $30.59 a barrel.
Oil prices soared by more than 14% earlier this week after oil ministers from Saudi Arabia and Russia met with their counterparts from Venezuela and Iraq and agreed to cap oil output at their January levels. Iran endorsed the agreement the following day but didn’t indicate whether it would scale down its oil production.
Iran previously said that it intends to ramp up oil exports back to its pre-sanction levels of 4 million barrels per day.
With the cap agreement being contingent on the full cooperation of major oil producers, the fate of the deal now hangs in the balance following Iran’s vague stance.
“The agreement has value in restricting major producers from adding incremental barrels to a saturated marketplace. However, it does little to correct the existing imbalance between global crude supply and demand,” said BMI Research in a note made available on Friday.