Oil trades below US$31 as rising US crude stockpiles expand glut

[HONG KONG] Oil traded below US$31 a barrel after US crude stockpiles rose to the highest in more than eight decades as Saudi Arabia and Russia propose to freeze output amid a worldwide surplus.

Futures lost as much as 1.2 per cent in New York, trimming the first weekly advance this month. Inventories expanded to 504 million barrels, the highest level in data going back to 1930, according to the Energy Information Administration.

Iraq supports any decision to support prices and balance the market, oil minister Adel Abdul Mahdi said in a statement, without saying whether it would cap its own production.

Oil is still down 18 per cent this year after the Organization of Petroleum Exporting Countries (Opec) abandoned output targets in early December and as US inventories swelled.

Iran, Opec's second-biggest producer until sanctions were intensified in 2012, will delay the start date for sales of a new heavy grade to June to give buyers more time to test the crude in their refineries.

West Texas Intermediate for March delivery, which expires Monday, fell as much as 37 US cents to US$30.40 a barrel on the New York Mercantile Exchange and was at US$30.41 at 7:36 am Hong Kong time.

Prices are up 3.3 per cent this week. The more-active April future was at US$32.55 a barrel.

Brent for April settlement declined 22 US cents, or 0.6 per cent, to US$34.28 a barrel on the London-based ICE Futures Europe exchange on Thursday. Prices are 2.8 per cent higher this week. The European benchmark crude ended the session at a premium of US$1.35 to WTI for April.

BLOOMBERG