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Sydney - Brent oil extended losses towards $50 a barrel as industry data showed US stockpiles expanded last week, raising speculation surging supplies are offsetting output cuts from OPEC and other producers.
Futures slid as much as 0.8% in London after falling 1.3% on Tuesday. US inventories rose by 4.53 million barrels last week, the American Petroleum Institute was said to report. Government data on Wednesday is forecast to show stockpiles climbed to a record, according to a Bloomberg survey.
Oil dipped near $50 a barrel this month for the first time in 2017 as swollen US stockpiles and rising output weighed on the reductions by OPEC and its partners. While the Organisation of Petroleum Exporting Countries won’t decide until May whether to prolong the cuts, ministers and officials from outside the group will meet this weekend in Kuwait to discuss the deal’s progress.
“There are certainly fears in the market that we are going to see another substantial inventory build,” said Michael McCarthy, chief markets strategist at CMC Markets in Sydney.
“The overall picture is disturbing in terms of the oil price and if we see confirmation of another build that short-term, downwards trend in crude is likely to continue.”
Brent for May settlement lost as much as 43 cents to $50.53 a barrel on the London-based ICE Futures Europe exchange and was at $50.68 at 09:55. The contract declined 66c to $50.96 a barrel Tuesday, the biggest drop since March 10. The global benchmark traded at a $2.70 premium to US marker West Texas Intermediate.
Supply glut
WTI for May delivery declined as much as 43c to $47.81 a barrel on the New York Mercantile Exchange. Total volume traded was about 11% below the 100-day average. The April contract expired on Tuesday after dropping 88c to $47.34.
US crude inventories probably increased by 3 million barrels to 531.2 million barrels in the week ended March 17, according to the median estimate in a Bloomberg survey of analysts before an Energy Information Administration report on Wednesday. Nationwide stockpiles have gained by about 49 million barrels since the start of this year.
Oil-market news:
US crude export volumes are sporadic on a monthly basis with inconsistent destinations as shipments depend on arbitrage, Casey Scott, a senior adviser of commercial marine operations for ConocoPhillips, said at the CMA Shipping conference.
Russia hasn’t ruled out extending the OPEC-led output deal and the final decision will largely depend on Saudi Arabia, Interfax reported, citing Vladimir Voronkov, Russia’s envoy to the international organizations based in Vienna.
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