Oil extends decline as US crude stockpiles seen expanding glut

[MELBOURNE] Oil fell for a second day before US government data forecast to show crude stockpiles in the world's biggest consumer expanded to a record level.

Futures slid as much as 3.7 per cent in New York. Crude supplies probably rose by 3 million barrels to 420.9 million through Feb 13, according to a Bloomberg News survey before a report Thursday from the Energy Information Administration. That would be the highest in weekly records compiled by the EIA since August 1982. Industry data Wednesday showed inventories climbed by 14.3 million barrels, according to reports on Twitter.

Rising US crude stockpiles contributed to a global glut that drove prices almost 50 per cent lower in 2014. Marathon Oil Corp will cut an additional 20 per cent from its spending plan for this year, as companies including Royal Dutch Shell Plc and Chevron Corp. reduce investments in response to the collapse.

"Inventory data tonight will be important," Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. "We are seeing evidence of pullback in investment. The supply-side response is starting to come through."

West Texas Intermediate for March delivery dropped as much as US$1.91 to US$50.23 a barrel in electronic trading on the New York Mercantile Exchange and was at US$50.60 at 3 p.m. Singapore time. The contract fell US$1.39 to US$52.14 on Wednesday. The volume of all futures traded was about 17 per cent above the 100-day average. Prices have decreased 5 per cent this year.

Brent for April settlement was US$1.01 lower at US$59.52 a barrel on the London-based ICE Futures Europe exchange. It declined US$2, or 3.2 per cent, to US$60.53 on Wednesday. The European benchmark crude traded at a premium of US$8.23 to WTI for the same month.

US crude stockpiles have surged above the five-year average for this time of the year, according to EIA data. Production climbed to 9.23 million barrels a day through Feb. 6, the most in weekly data compiled since January 1983 by the EIA, the Energy Department's statistical arm.

Supplies at Cushing, Oklahoma, the delivery point for WTI, rose by 3.1 million barrels last week, the American Petroleum Institute reported Wednesday. The industry-funded API collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA.


BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes