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London - Oil slid for a third day as record US crude stockpiles were seen jeopardising OPEC’s efforts to drain a global surplus.
Futures declined 1.2% in New York. While Saudi Arabia’s February crude shipments fell again, indicating OPEC’s top producer is cutting deeper than it pledged, US stockpiles expanded by 1.5 million barrels last week. Still, Citigroup said the increase in American inventories was “muted” compared with earlier gains and may peak as refineries restart after maintenance.
As the Organisation of Petroleum Exporting Countries and 11 other nations reduce supply in an effort to end a three-year glut, US 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 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 15:01 in London.
Futures traded between $51.22 and $54.94 in February, the tightest range since August 2003. Total volume traded was about 4% below the 100-day average.
Inventory gains
Brent for May settlement fell 64c to $55.72 a barrel on the London-based ICE Futures Europe exchange. Prices declined 15c to $56.36 on Wednesday. The global benchmark crude traded at a $2.05 premium to May WTI.
US 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.
Supplies at Cushing, Oklahoma, the delivery point for WTI, gained 495 000 barrels to 63.5 million last week. The nation’s crude production was 31 000 barrels higher at 9.03 million barrels a day, the Energy Information Administration reported Wednesday.
Saudi Arabia, the world’s biggest crude exporter, shipped 7.04 million barrels a day in February, a drop of 126 000 barrels a day from January, vessel-tracking data compiled by Bloomberg show. Measured against the country’s own figures, outflows are down by about 1 million barrels a day since December.
Oil-market news:
Saudi Aramco cut official selling prices for April deliveries to Asia, Europe and the US Iraq’s crude exports rose by 1% in February, despite its commitments to reduce, according to ship-tracking data compiled by Bloomberg The options market shows traders were becoming less concerned about a sharp fall back in crude prices.
Exxon Mobil is trading in long-term projects that pump oil over decades for US shale drilling that can be switched on or off as crude prices change.
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