Oil prices tumbled on Thursday, pressured as U.S. crude stockpiles boosted to their highest in nearly 17 months in the midst of record production and as financial worries cast doubt over growth in demand for petroleum.
International benchmark Brent futures were at $71.44 per barrel, drop 29 cents or 0.4 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude oil futures were at $64.28 per barrel, down 33 cents or 0.5 percent from their preceding settlement.
U.S. crude inventories increased 7 million barrels to 456.6 million barrels in the week ago, their peak since November 2017, the Energy Information Administration said on Wednesday.
U.S. crude oil production stayed at a record 12.2 million barrels per day (bpd), making the United States the world’s largest oil producer ahead of Russia and Saudi Arabia.
There are also worries that a financial stoppage will soon dent petroleum consumption after the International Monetary Fund this week demoted its worldwide development prediction to the lowest in a decade.
In spite of the rise in U.S. supply and the financial worries, worldwide oil markets stay tight in the midst of supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), U.S sanctions on oil exporters Iran and the Venezuela, and growing fighting in Libya.
"(Oil markets will remain tight) as long as Saudi Arabia continues to back the production cut deal as aggressively as it has done so far," said Ole Hansen, head of commodity strategy at Saxo Bank.
Brent and WTI have climbed by around 30 and 40 percent respectively since the beginning of the year.
"Pressure to global supplies continues to mount because of sanctions-linked problems in Iran and Venezuela and rising geopolitical risk in Libya," said Stephen Innes, head of trading at SPI Asset Management.
Beyond the short-term stance for oil markets, lots of attention is on the future of demand in the midst of the growth of alternative petroleum for transport.
"We believe global demand has another 10 million barrels bpd of growth, with over half from China," Bernstein Energy said in a note on Thursday.
Present oil demand stands around 100 million bpd.
Bernstein said it anticipated oil demand to top around 2030, but added that "we expect a long plateau rather than a sharp decline" in consumption after that.
"While no industry lasts forever, the age of oil is far from over," Bernstein said.