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Crude oil prices continue to recover this week as U.S. crude oil inventory supplies continue decline recording their biggest cut in the past eleven months. This was despite the sudden rise in U.S. production which is nearing a two-year high. The price of crude oil ended their three-day low as investors took advantage of weak crude oil prices.

Weekly Oil Price Movement

On Wednesday, the Energy Information Administration reported that domestic production has risen to a two-year high sending the WTI down by around 1.6%. Gasoline for September on the Nymex was also down by 1% on Wednesday. It is now up by around 0.6% while September heating oil which was 1.6% down on Wednesday has recovered by 0.11%.

According to the EIA, crude oil production has jumped by 9.502 million barrels per day which represents a production 79,000 barrels higher each day compared to the previous week. This is recorded to be the highest weekly production numbers since July 2015 which dampens the recent crude bullish direction that weakens the outlook for crude futures touching a price of $50 per barrel.

However, U.S. crude has fallen by 8.9 barrels last week surpassing most expectations of around 3.6 million barrels. The sudden rally in the U.S. production raised market concern once again regarding a possible global crude oversupply.

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This is an issue the Organization of the Petroleum Exporting Countries has been trying to avoid since last year. OPEC has been imposing production cuts among its producers and other participating countries such as Russia in the past couple of months even extending the production cap to help stabilize oil prices back above the $50 or even $60 price level.

The lack of compliance from a number of producers led the organization to extend the cut until next year in hopes of preventing global gut supply. Last month, oil prices touched the $50 level after U.S. crude oil production fell for the fourth straight week easing concerns regarding the country’s growing influence over the global oil market.

On Thursday, the September West Texas Intermediate crude lost 1.6% closing in at $46.78 per barrel on the New York Mercantile Exchange.

According to recent data from the Joint Organizations Data Initiative, Saudi Arabia which is one of OPEC’s biggest producers, has shown a decline in their exports. From May, crude oil exports in the country have hit a 33-month low in June by 6.89 million barrels per day while crude oil stockpiles are at a 65-month decline. This is the lowest number seen since last 2012. The country announced last month that it intends to cut its total crude exports by as much as 1 million barrels per day to 6 million barrels per day by August.

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