Seventy-dollar oil may not be in the cards this year.
Oil fell on Friday, June 8, as J.P. Morgan cut its crude price forecast and U.S. producers ramped up drilling even amid surging production.
U.S. benchmark West Texas Intermediate crude futures for July delivery fell 0.5% to $65.63 at 1 p.m. New York time. Brent crude, the global benchmark, dropped about 1% to $76.57.
J.P. Morgan cut its 2018 WTI crude forecast but maintained its Brent oil price outlook.
"We estimate 2018 Brent to be mostly unchanged at $69.30 a barrel but we lower WTI by $3 to $62.20 a barrel in 2018 versus our previous estimates [on] U.S. supply-side constraints," J.P. Morgan analysts, including Abhishek Deshpande, wrote in a June 8 research note.
Meanwhile, oil producers in the U.S. brought one rig online for a total of 862, according to Baker Hughes (BHGE) . Gas rigs climbed by one to 198 and Miscellaneous rigs remained unchanged at two, bringing the overall total U.S. rig count to 1,062.
The largest build of rigs occurred in Texas' Permian basin, where three rigs were brought online, bringing the total to 480. The Cana Woodford basin in Oklahoma, however, took three rigs offline.
The increase in the rig count comes as U.S. crude stockpiles rose by 2.1 million barrels for the week ending June 1, according to the U.S. Energy Information Administration. The build, which was primarily driven by an increase in net crude imports, was bearish compared to the consensus estimates of a 2.1-million-barrel draw, said Credit Suisse analyst William Featherston.
Inventories rose while U.S. production reached 10.8 million barrels per day last week, a weekly record, with all of the gains coming from the Lower 48 states.
"This puts it ahead of the EIA's current 2018 forecast of 10.7 million barrels per day," said TD Securities Inc. analysts, including Menno Hulshof. "We suspect that the EIA may increase its forecast in next week's Short-Term Energy Outlook."
The record output put pressure on oil prices earlier in the week, sending WTI below $65 a barrel for the first time since early April, noted Hulshof.
-- This story has been updated to include additional commentary from J.P. Morgan