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Global supply glut weighs on oil prices
[NEW YORK] Persistent worries about a global oversupply of crude oil weighed on the oil market Thursday after US inventories leaped to another record high this week.
US benchmark West Texas Intermediate for delivery in April fell 77 cents to US$50.76 a barrel on the New York Mercantile Exchange at the end of a volatile session in which WTI spent some time in positive territory.
In London, Brent North Sea crude for April, the international benchmark, dipped seven cents to US$60.48 a barrel.
US crude inventories jumped by 10.3 million barrels in the week February 27 to 444.4 million barrels, the US Department of Energy reported Wednesday.
That marked the fifth consecutive record high in weekly data begun in 1982 and the highest level in monthly records in 84 years, as US producers pumped out a robust 9.3 million barrels per day.
"What we continue to see is the market getting doubtful about the big production cuts some people were expecting," said Bart Melek, head of commodity strategy at TD Securities.
Traders awaited the latest Baker Hughes weekly oil rig report due Friday. The number of drilling rigs operating fell steadily over several weeks, leading some people to say that production would fall, but recently the decline in rigs has slowed.
"As far as the overall petroleum supply/demand picture, we see an ongoing first half 2015 supply/demand surplus on the order of 1.4 mmbpd that is being confirmed by sharply rising US crude oil inventories," said Tim Evans of Citi Futures in a research note, "The market continues to tolerate this stock growth, with no new lows in price since mid-January despite the surge, but we have to wonder whether the market won't be forced to acknowledge the ongoing excess at some point."