Oil declined for third consecutive day, after data from industry showed, that U.S. crude stockpiles surged, raising speculation for rising supply from U.S shale producers is offsetting cuts by OPEC.
Futures slid with 1.8% in New York, after dropping 3.1% in the previous couple of sessions.Crude supplies grew with 14.2 million barrels in the last week.Government data Wednesday is forecast to show stockpiles climbed for a fifth week. Oil output from the U.S. will surge next year to the highest level since 1970, according to updated estimates from the Energy Information Administration.
Oil price hesitated just above $50 a barrel since a deal to trim output between the Organization of Petroleum Exporting Countries and 11 other nations took effect on Jan. 1. While OPEC members implement pledged cuts and Russia says its own reductions are ahead of schedule, U.S. production has edged higher as drillers targeting crude boosted the rig count to the most since October 2015.
“There’s a recognition that even with the OPEC production cuts, it’s going to take some time for this large inventory overhang to be reduced to more normal levels,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “It leaves the oil price vulnerable to a move back below $50.”
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