Inventory build-up contributes to extended drop in oil prices

March 28 (UPI) -- Crude oil future prices extended losses early Thursday that occurred following reports earlier this week of a build-up in crude oil inventories.

West Texas Intermediate crude oil futures were lower for a second day after closing on Tuesday at $59.94 per barrel, just short of the $60.23-per-barrel price on March that was the highest so far this year. As for Brent, prices were also lower for a second day. Brent saw a year-to-date high on March 20.

WTI fell 1.4 percent to $58.60 per barrel as of 7:46 a.m. EST, while Brent fell 1.1 percent to $66.49 per barrel as of the same time.

"Oil prices appear to have a hangover from yesterday's build to weekly U.S. crude inventories," Matt Smith, director of commodity research at ClipperData, told UPI.

U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 2.8 million barrels from the previous week, the EIA said Wednesday in its weekly report, the one for the week ended Friday.

On Tuesday, the American Petroleum Institute also reported a build-up in crude oil inventories.

"Despite OPEC production cuts translating into lower exports from core OPEC members and Venezuelan power outages reducing output, trepidation in broader markets and a rising dollar appears to be weighing on prices today," he added.

OPEC and Russia agreed last year to cut production by 1.2 million barrels per day starting in January. Venezuela has seen a string of blackouts, in addition to U.S. sanctions, that are expected to hit the country's output of about 1.1 million barrels per day, according to reports by secondary sources to OPEC.

WTI and Brent both reached their highest levels for all of 2018 on October 3, then futures traded at over $76 per barrel and over $86 per barrel.