Oil trades in the red on rising US output

Oil benchmarks are trading in the red this Friday morning in Asia, having dropped sharply in the previous session on surging US production.

Brent crude is currently trading at $70.50 per barrel, representing a 0.35% drop on the day and a barrel of WTI crude is changing hands at $61.70, down 0.15% on the day.

Both benchmarks fell close to 3% on Thursday after the Energy Information Administration (EIA) data showed the US oil production hit a record high of 12.3 million barrels per day (bpd) last week, rising by around 2 million bpd over the past year.

More importantly, US oil exports rose above 3 million bpd for the first time this year, triggering fears that the market may remain well supplied despite the OPEC+ output cut deal and US' decision to force Iranian oil exports to zero.

The Trump administration, while reimposing sanctions on Iran in November, had granted waivers to the biggest buyers of Iranian oil, namely China, India, Turkey, South Korea, Japan, Taiwan, Greece, and Italy. The US, however, has now ended the waivers in a bid to tighten its economic on Iran and markets are worried that Iran may respond in a manner that could heighten geopolitical tensions.

Looking forward, oil benchmarks may remain under pressure and may extend the slide if Baker Hughes data, due for release in the North American session, shows a big spike in the US rig count.