Oil prices drop more than 3%, ending bullish streak

Oil prices plunged more than 3 percent on Wednesday, ending the longest bullish streak in five years, as more evidence indicated OPEC exports rose last month.

U.S. West Texas Intermediate crude futures fell $1.74, or 3.7 percent, to $45.33 per barrel at 1:17 p.m. ET, erasing much of the previous two sessions’ gains.

International benchmark Brent crude futures slumped $1.56, or 3.1 percent, to trade at $48.05 per barrel.

WTI prices rose nearly 11 percent from a 10-month closing low over the course of eight sessions, the contract’s longest winning streak since 2012.

“Eight consecutive days we saw all the shorts, the newly established shorts down at $42, the lower end of the range, they just got their faces ripped off,” said Jeff Kilburg, founder and CEO at KKM Financial, referring to traders who bet prices would fall further.

WTI crude futures, source: Factset

Killburg said he expects U.S. crude prices to remain stuck in a range of $42 to $47.

“We’re in no man’s land as this tug of war of this rebalancing act continues to play out,” he told CNBC’s “Futures Now

Bearish sentiment crept back into the market after data from Thomson Reuters Oil Research showed OPEC’s exports rose in June. This was despite the producer group reaching an agreement in May to extend a deal to keep 1.8 million barrels a day off the market in order to shrink global supplies and end a three-year glut.

OPEC exported 25.92 million barrels per day in June, up 450,000 bpd from May and 1.9 million bpd more than a year earlier.

CNBC reported last week that shipments from top oil exporter Saudi Arabia and other OPEC members were on the rise in June, citing analysis by tanker tracking firm ClipperData.

OPEC and other oil exporters including Russia have entered a seventh month of production cuts, but analysts remain concerned that exports have not fallen as quickly as output this year.

“Everyone continues to fight for market share and not necessarily constrain supply to the global market and that realization I think has registered today,” said John Kilduff, founding partner at energy hedge fund Again Capital.

Saudi Arabian state oil giant Saudi Aramco on Wednesday said it would cut prices for light crude grades to customers in Asia in August, a sign of rising competition in the key demand hub.

“That indicates that the production scheme is just not helping prices,” Scott Nations, chief investment officer at NationsShares, told “Futures Now.”

A report that Russia has ruled out deeper production cuts also weighed on markets, Nations said. Russia is the largest non-OPEC contributor to the output cut deal.

Kilduff attributed part of the recent bull run to traders unwinding bets that oil prices would fall further ahead of the July 4 holiday. Independence Day in the U.S. overlapped with a deadline for Qatar to respond to demands by a coalition of Arab nations that has enforced a blockade against the small Gulf monarchy.

Some of the geopolitical risk premium appeared to be coming out of the oil market on Wednesday in the absence of an acceleration of tensions, Kilduff said. Qatar’s foreign minister on Tuesday said the Saudi-led group’s list of demands is “unrealistic and is not actionable.” On Wednesday, he called for dialogue to end the diplomatic crisis.

Traders are awaiting the latest data on U.S. crude stockpiles on Thursday, which are delayed by one day due to the July 4 holiday. Analysts expect stocks to fall by 2.8 million barrels, according to a Reuters survey.

— Reuters contributed to this story.