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| Edited By: |Source: Reuters |Updated: Mar 17, 2018, 04:07 AM IST
Oil prices fell on Friday as increasing stockpiles of crude and oil products in the United States undercut the economic optimism that boosted equities markets.
Front-month US crude futures fell 76 cents to settle at $70.04 a barrel, erasing gains from earlier. Crude prices have fallen in eight of the last nine trading days, and have plunged from a 2010 high near $90 a barrel in early May.
London Brent crude closed down 16 cents at $71.68 a barrel.
"The lesson here is that fundamentals matter," said Tim Evans of Citi Futures Perspective in New York. "The decline in crude prices highlights an underlying fundamental weakness."
US crude inventories rose in 15 of the 16 weeks through May 14, according to weekly data from the US Energy Information Administration. EIA data also shows stocks at Cushing, Oklahoma, the delivery point for NYMEX crude futures, at record levels, while US gasoline stocks are nearly 9% higher than year-ago levels.
The bearish fundamentals in oil markets helped push crude prices lower even as economic optimism helped to boost US equities, with the Dow Jones and S&P 500 indices rising more than 1%.
The dollar weakened against a basket of foreign currencies and the euro strengthened.
Equities and the euro firmed as worries ebbed over the sovereign debt crisis in Europe and an overhaul of US financial regulation. The US Senate voted to approve broad financial reforms on Thursday.
"Crude is demonstrating it can step away from some of the influence of other financial markets because we haven't seen a big rebound in fuel demand and inventories are sizable," said Gene McGillian of Tradition Energy in Stamford, Connecticut.
Royal Dutch Shell on Friday lifted its force majeure on shipments of Nigeria's Bonny Light crude, indicating that supply from the top African crude exporter may rise, following restrictions since early May, after leaks and fires on a pipeline.
"That means we are no longer dealing with a major supply disruption," said Evans.
US NYMEX crude for July delivery fell most sharply, with European Brent crude dipping 36 cents to $71.34 as of 2.43pm EDT. Front-month NYMEX futures have been hit hard by record inventories at the landlocked Cushing delivery point.
Cushing stocks rose by 5,00,000 barrels in the week through May 18 to a record 39.46 million barrels, data from industry tracker Genscape showed on Thursday.
US crude has dropped sharply this month on waning confidence in global markets due to the crisis in the euro zone triggered by Greece's debt problems.
