U.S. supply levels drag on oil prices

Feb. 8 (UPI) -- Emerging signs of supply-side pressures building in the United States pushed crude prices lower for the third straight session early Wednesday.

Crude oil prices moved lower Tuesday after oilfield services company Baker Hughes reported a monthly increase of nearly 8 percent in exploration and production activity in the United States.

Supply-side pressures last year pushed crude oil prices to historic lows and made it cost prohibitive to work in some of the inland shale basins in the United States. Shale oil has proven more resilient to market pressures, however, and recent government estimates show production gains are expected in 2017.

Adding to that was a report from the American Petroleum Institute that showed a significant build in crude oil stocks at 14.2 million barrels. That report emerged late Tuesday and spilled over to tarnish oil prices before the start of trading in New York.

The price for Brent crude oil was 0.5 percent below yesterday's close to $54.78 per barrel about a half hour before U.S. markets opened. Light, sweet U.S. crude -- West Texas Intermediate -- was down 1 percent to $51.65 per barrel.

Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said in an emailed report the United States was playing the role of market spoiler by countering efforts by the Organization of Petroleum Exporting Countries to balance the market.

"So far in 2017, the U.S. stock builds have been larger than expected and the API data does not change that trend," he said.

OPEC agreed to a ceiling of 32.5 million barrels per day to offset supply-side strains, though U.S. momentum is the balancing factor.

Bearish trends are emerging elsewhere as oil demand from China, one of the world's strongest economies, moved lower. In the United States, a stronger dollar is moving against oil's favor and evolving U.S. economic policies are creating questions for many investors.

Tamas Varga, an analyst at broker PVM, said in an emailed report the rhetoric of national pride that helped put Donald Trump in the White House may have unexpected consequences.

"There will be no sudden impact because of the U.S. protectionist approach but rather gradual erosion of economic and oil demand growth," he said. "However, it does not change the fact that the new U.S. economic policy brings a very clear, albeit not present, danger with more losers than winners."