[NEW YORK] Oil traded near US$57 a barrel before US government data forecast to show crude stockpiles expanded further from a record.
Futures dropped as much as 0.9 per cent in New York before erasing losses. Inventories probably increased by 3.3 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report. The US economy barely grew in the first quarter, Commerce Department data showed. Investors also awaited a policy statement from the Federal Reserve due later Wednesday.
Oil's rally from a six-year low in March has been stymied by signs a global supply glut that drove prices into a bear market last year will persist. The Organization of Petroleum Exporting Countries, which pumps about 40 per cent of the world's oil, has resisted calls to cut output even as the US produces near the fastest pace in more than three decades.
"The market is still concerned about oversupply," said Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut. "Oil's gotten a little ahead of itself. We are going to be vulnerable, especially it we get big builds."
West Texas Intermediate for June delivery gained 11 cents to US$57.15 a barrel at 9:31 am on the New York Mercantile Exchange. Total volume was about 56 per cent below the 100-day average for the time of day. Prices have advanced 20 per cent in April, set for the biggest monthly gain since May 2009.
US Stockpiles Brent for June settlement gained 45 cents to US$65.09 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of US$7.91 to WTI.
"The oil market is far from being balanced," said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. "We believe there are still risks in the second quarter that warrant a cautious stance in taking on some long exposure."
US crude stockpiles climbed by 4.2 million barrels in the week ended April 24, the industry-funded American Petroleum Institute reported Tuesday, according to a person familiar with the data. Supplies at Cushing, Oklahoma, the delivery point for WTI futures, declined, the API was said to report.
Total inventories increased to 489 million through April 17, rising for a 15th week, according to the EIA. That's the highest in weekly data from the Energy Department going back to August 1982. Supplies haven't been this high since 1930, based on monthly records dating back to 1920.
Gross domestic product in the US, the world's biggest oil consumer, rose at a 0.2 per cent annualized rate in the first quarter, the Commerce Department said. The median forecast of 86 economists surveyed by Bloomberg called for a one per cent gain.
Technical specialists from Russia, Mexico and Oman will confer with their OPEC counterparts May 12 and May 13, said two people who asked not to be identified because the discussions are private. The meeting was suggested by Venezuela, which has urged the 12-member group to revive prices by reducing output.
Opec's ministerial gathering is scheduled for June 5 and the chances of the group agreeing to a joint production cut with non-members are limited, according to Commerzbank AG. Saudi Arabia, the world's biggest oil exporter, led the group's decision in November to maintain its collective quota at 30 million barrels a day.
Speculators are abandoning hedges on an exchange-traded oil fund at the fastest pace ever. The Chicago Board Options Exchange Crude Oil Volatility Index has slumped 31 per cent in April, the most on record.