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[MELBOURNE] Oil traded near the lowest price in two weeks after government data showed US crude stockpiles expanded further from a record high, adding to a global surplus.
Futures were little changed in New York, holding below US$49 a barrel for a third day. Crude inventories increased by 4.51 million barrels to 448.9 million through March 6, the highest level in weekly data compiled since August 1982, the Energy Information Administration reported on Wednesday. The world oil market is oversupplied by 1 million to 1.5 million barrels a day, according to an official from Oman, the biggest non-OPEC producer in the Middle East.
Rising US supplies from shale formations in Texas and North Dakota is contributing to a global glut that drove prices down by almost half in 2014. The nation's output continues to climb, even as drillers cut the number of active rigs to a four- year low as they reallocated assets to the most productive regions.
"This is an adjustment period, or a normalization to low prices," Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. "We're getting stockpile builds but we're seeing some support for the market. There's a response to low prices; rigs are down."
West Texas Intermediate for April delivery was at US$48.21 a barrel in electronic trading on the New York Mercantile Exchange, up 4 US cents, at 2 pm Sydney time. The contract fell 12 US cents to US$48.17 on Wednesday, the lowest close since Feb 26. The volume of all futures traded was about 23 per cent below the 100-day average. Prices have decreased 9.5 per cent this year.
Brent for April settlement was 25 US cents higher at US$57.79 a barrel on the London-based ICE Futures Europe exchange. It gained US$1.15 to US$57.54 on Wednesday. The European benchmark crude traded at a premium of US$9.63 to WTI.
Crude inventories in the US, the world's largest oil consumer, are 26 per cent above the five-year average for this time of the year as output surged to a record. The nation pumped 9.37 million barrels a day last week, the most in EIA data going back to January 1983.
Stockpiles at Cushing, Oklahoma, the biggest US oil- storage hub and the delivery point for WTI contracts, rose by 2.32 million barrels to 51.5 million, according to the Energy Department's statistical arm. That's the highest level since January 2013.
Drillers in the US have idled 653 rigs since the start of December, data from Baker Hughes showed. The number of active machines seeking oil was 922 as of March 6, the fewest since April 2011, the services company said.
The global surplus comes not only from US supply but also other countries boosting output, said Salim Al Aufi, Oman's oil and gas undersecretary. Oman, along with Organization of Petroleum Exporting Countries members Saudi Arabia and the United Arab Emirates, have all increased production, he said at a forum in Muscat.