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Oil Slips as U.S. Stockpiles Set Record Despite OPEC Cuts
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Loading...Oil slid for a third day as record U.S. crude stockpiles were seen jeopardizing OPEC’s efforts to drain a global surplus.
Futures declined 1.2 percent in New York. While Saudi Arabia’s February crude shipments fell again, indicating OPEC’s top producer is cutting deeper than it pledged, U.S. stockpiles expanded by 1.5 million barrels last week. Still, Citigroup Inc.
said the increase in American inventories was “muted” compared with earlier gains and may peak as refineries restart after maintenance.
As the Organization of Petroleum Exporting Countries and 11 other nations reduce supply in an effort to end a three-year glut, U.S. producers are ramping up and potentially offsetting the curbs. That has so far subdued price swings, sending the Chicago Board Options Exchange Crude Oil Volatility Index on Wednesday to the lowest since October 2014. While refinery demand has risen with easing seasonal maintenance, it could be a week or two before processing begins increasing steadily, according to Citigroup.
For anyone with a bearish outlook “it is probably hard to resist hitting the sell button,” said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd. in London. “Nationwide crude oil stocks are at their highest.”
West Texas Intermediate for April delivery dropped 62 cents to $53.21 a barrel on the New York Mercantile Exchange at 1:01 p.m. in London. Futures traded between $51.22 and $54.94 in February, the tightest range since August 2003. Total volume traded was about 4 percent below the 100-day average.
Brent for May settlement fell 64 cents to $55.72 a barrel on the London-based ICE Futures Europe exchange. Prices declined
15 cents to $56.36 on Wednesday. The global benchmark crude traded at a $2.05 premium to May WTI.
U.S. oil inventories last week rose to 520.2 million, the most in weekly data going back to 1982. They have increased by more than 41 million barrels since the start of the year.
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