Oil extends decline as US crude supplies seen expanding glut

[HONG KONG] Oil extended declines for a third day before US government data forecast to show increasing crude stockpiles kept supplies at the highest level in more than eight decades.

Futures slid as much as 1.2 per cent in New York after falling 3 per cent Monday. Inventories rose by 2.85 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Oil-producing countries are discussing a draft resolution for the Doha meeting on freezing output, Russian energy minister Alexander Novak told reporters.

Oil's rebound from a 12-year low this year has stalled amid doubts about the prospects of a proposed deal to freeze supply. Saudi Arabia will only cap production if Iran, pumping at the fastest rate in almost four years, and other major producers do so, the kingdom's deputy crown prince said Friday. Russia and all Opec members except Libya will attend the April 17 meeting.

"While we have high levels of crude inventory, it's very difficult for oil to make a sustained move higher," Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone.

"The momentum has been negative since the Saudi comments." West Texas Intermediate for May delivery dropped as much as 43 US cents to US$35.27 a barrel on the New York Mercantile Exchange and was at US$35.31 at 8:39 am Hong Kong time. The contract fell US$1.09 to US$35.70 on Monday, the lowest close since March 3. Total volume traded was about 47 per cent below the 100-day average.

Brent for June settlement lost as much as 33 US cents, or 0.9 per cent, to US$37.36 a barrel on the London-based ICE Futures Europe exchange, before trading 32 US cents lower at US$37.37. It slid 2.5 per cent to US$37.69 on Monday, the lowest close since March 3. The global benchmark was at a premium of 71 US cents to WTI for June.

BLOOMBERG