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US oil price drop on record-high stockpiles
[LONDON] US oil prices slid on Wednesday on data showing that US crude stockpiles ballooned last week to a new record high, stoking supply glut concerns.
New York's benchmark West Texas Intermediate (WTI) for April delivery sank 64 cents to US$47.65 per barrel, reversing earlier gains.
"US crude prices were in full retreat again today after yet another larger-than-expected rise in oil inventories," said IG analyst Chris Beauchamp.
"It is looking more and more like the bounce seen in February was just a flash in the pan."
On the upside, European benchmark Brent North Sea crude for April rose 65 cents to US$57.04 a barrel.
"Brent crude was slightly higher over concerns on the output from Libya ... while WTI was down following another stock build in the weekly oil inventories data," noted CMC Markets analyst Jasper Hewson.
The US government's Energy Information Administration (EIA) said Wednesday that American oil reserves rose 4.5 million barrels in the week to March 6.
That took total supplies to 448.9 million, the highest level since the EIA started compiling weekly inventory data in 1982.
Market expectations had however been for a larger gain of 4.6 million barrels, according to a survey by Bloomberg News.
"The EIA's weekly US petroleum report shows that stocks of oil rose again last week," said Thomas Pugh, commodities analyst at Capital Economics.
"And, rather repetitively now, this is the seventh consecutive week that oil stocks have reached a new record."
Crude prices lost some 60 per cent of their value to about US$40 between June and late January owing to an oversupply in world markets, a weak global economy and the strong dollar.
Prices have since rebounded following a slowdown in US oil drilling activities, but analysts say volatility is likely to continue for some time.
The oil market had suffered heavy falls on Tuesday as the rebounding dollar pushed the market sharply lower.
WTI tumbled US$1.71 and Brent fell US$2.14 as the greenback soared against major rivals.
The rallying US unit makes dollar-priced oil more expensive for buyers using weaker currencies. That tends to dent demand and weigh on price levels.
Meanwhile on Wednesday, the European single currency hit a 12-year dollar low on expectations of a US interest rate hike. The euro slid to US$1.0557 - the lowest level since March 2003.
"The strong US dollar (is) limiting any upside potential in crude oil prices," added Myrto Sokou, senior research analyst at brokerage Sucden Financial.