Crude oil futures down on weak Asian trend

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Crude oil futures lost more ground on Friday, with the U.S. market set for a second week of decline on pressure from record United States production and expectation that the Opec cartel will increase output. That left U.S. crude futures down 3.1% for the week (and 2.2% for May) after dropping 4.9% the week before.

Crude stocks at the Cushing, Oklahoma, delivery hub for WTI fell 556,000 barrels, EIA said. On a most-active basis, Brent crude ended May with a 3.2% gain.

The spread between the two benchmarks, which climbed above $11 a barrel, had narrowed slightly by 12:20 GMT to about $10.95 as Brent erased some of its earlier gains. The Permian basin, which stretches across West Texas and eastern New Mexico, is the largest U.S. oilfield.

Kazakhstan's oil output, however, continued rising.

According to General Electric's Baker Hughes energy services firm, US drillers added two oil rigs in the week to June 1, bringing the total to 861, the most since March 2015.

That means an Asian buyer of physical WTI crude for loading in Texas is paying quite a significant premium over the price of paper oil in the futures market.

However, the oil rig count was down 46 percent from its peak of 1,609 in October 2014, before oil prices began plummeting.

More news: Over 146,000 Americans will lose their jobs because of Trump’s trade tariffs

Follow oil in real time here. Brent recovered, however, when a Gulf source flagged that any rise in production would be gradual. The difference is giving trading giants an opportunity to export millions of barrels as shale output continues to surge.

USA crude production rose to 10.77 million barrels a day, the highest in weekly data going back to 1983, the Energy Information Administration said Thursday. In March, it jumped 215,000 barrels per day (bpd) to 10.47 million bpd, a new monthly record, the Energy Information Administration said on Thursday.

"You had the API showing a strong build in crude oil and nothing fantastic on the products", says Olivier Jakob, managing director of consultant Petromatrix GmbH.

The drawdown assuaged some worries from US traders who have watched the West Texas Intermediate crude (WTI) benchmark weaken due to high production levels and signals that OPEC will let its supply-cut pact come to a close.

Rosneft accounts for about 40 percent of total oil output in Russian Federation, which pledged to cut its output by 300,000 bpd from January 2017 as part of the global deal with the Organization of the Petroleum Exporting Countries.

USA natural gas production in the lower 48 states rose to an all-time high of 88.8 billion cubic feet per day (bcfd) in March, up from the prior record of 87.7 bcfd in February, according to EIA's production report.

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