Oil wobbles as looming US stockpile gain keeps market nervous

[HONG KONG] The prospect of a further increase in record US crude stockpiles that have undercut Opec's output curbs kept oil investors anxious, with prices stuck near US$48 a barrel.

Futures in New York rose 0.5 per cent after they slipped by the same amount on Monday. They alternated between gains and losses through four sessions last week as well, but the gyrations were limited to within US$2 a barrel. US stockpiles are forecast to have gained 1.37 million barrels last week. While the Organization of Petroleum Exporting Countries and other nations are cutting output, concern is growing they need more time to trim global inventories.

If industry data due Tuesday and government data on Wednesday show US stockpiles are continuing to rise, it would be further evidence that the effect of output curbs by other producers is being blunted by rising American supply and drilling activity.

Five Opec countries joined with non-member Oman to voice support for prolonging their cuts past June. The market may rebalance later this year, BP Plc deputy chief executive officer Lamar McKay said.

"The market remains pretty nervous and the source of that is rising inventory and output," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

"The cuts by Opec, Russia and others have not produced the kind of reductions in supply that had been anticipated by this stage."

West Texas Intermediate for May delivery was at US$47.97 a barrel on the New York Mercantile Exchange, up 24 US cents, at 11.41am in Hong Kong. Total volume traded was about 55 per cent below the 100-day average. Prices declined 24 US cents to US$47.73 on Monday.

Brent for May settlement was 20 US cents higher at US$50.95 a barrel on the London-based ICE Futures Europe exchange. Prices fell 5 US cents to US$50.75 on Monday after declining 1.9 per cent last week. The global benchmark was at a premium of US$2.98 to WTI.

US crude inventories rose to 533.1 million barrels through the week ended March 17, according to the Energy Information Administration. Stockpiles are at the highest level in weekly data compiled by the agency since 1982. The industry-funded American Petroleum Institute is due to released separate supply data on Tuesday.

BLOOMBERG