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Oil trades near US$41 as US crude supplies seen rising amid glut
[HONG KONG] Oil traded near US$41 a barrel before US government data forecast to show rising crude stockpiles kept supplies at the highest level in more than eight decades.
May futures fell as much as 1.2 per cent in New York after declining 0.2 per cent Tuesday. Inventories probably increased by 2.53 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday.
This compares to industry data that showed an 8.8 million barrel gain. Libya will skip a meeting between major oil exporters in Doha next month to freeze output, according to a person familiar with the situation.
"The large US crude stockpiles will act as a headwind to price gains," David Lennox, an analyst at Fat Prophets in Sydney, said by phone.
"If producers can agree to remove some incremental supply from the market at the Doha meeting, what they lose in production, they gain in a price rise and additional revenue. Just talking about a freeze has helped oil move higher."
Oil slumped to a 12-year low this year before rising on speculation that stronger demand and falling US output will ease a global glut. Supply will respond to low investment and declines across the most important non-Opec producers, setting the stage for a price recovery in the second half of this year, according to Jefferies Group LLC.
West Texas Intermediate oil for May delivery lost as much as 49 US cents to US$40.96 a barrel on the New York Mercantile Exchange and was at $41.01 at 10:14 am Hong Kong time. The contract fell 7 US cents to US$41.45 on Tuesday. Total volume traded was about 54 per cent below the 100-day average.
Brent for May settlement fell as much as 45 US cents, or 1.1 per cent, to US$41.34 a barrel on the London-based ICE Futures Europe exchange. The contract added 25 US cents to US$41.79 on Tuesday. The global benchmark crude traded at a 36-cent premium to WTI.
US crude stockpiles are at 523.2 million barrels, the highest level since 1930, according to EIA data. Supplies at Cushing, Oklahoma, the delivery point for WTI, declined by 1.37 million barrels last week, the American Petroleum Institute reported Tuesday.