Oil is being held back after its worst week in two years as fears over rising U.S. crude supplies curb investor optimism. Futures are trading below $60 a barrel in New York, little changed after a near 10 percent decline last week, as forecasts for rising American crude inventories compound concern U.S. shale’s resurgence is hampering OPEC’s efforts to shrink global supplies. More cause for worry came after industry data on Tuesday showed stockpiles of crude and gasoline had continued to expand.
Oil has erased this year’s gains after the best start to the year in more than a decade, putting in jeopardy the Organization of Petroleum Exporting Countries and allies’ strategy as well as prices. While the International Energy Agency said crude inventories in developed nations are falling and demand is rising, it warned that higher prices are stimulating more supply from American shale drillers.
West Texas Intermediate for March delivery was little changed at $59.17 a barrel at 12:53 p.m. in Singapore after falling as much as 36 cents on the New York Mercantile Exchange earlier. The contract fell 10 cents to settle at $59.19 on Tuesday. Total volume traded was about 6.9 percent below the 100-day average. Brent for April settlement rose 7 cents to trade at $62.79 on the London-based ICE Futures Europe exchange. The global benchmark was at a $3.78 premium to April WTI.
In the U.S., the American Petroleum Institute was said to have reported nationwide crude stockpiles rose by 3.95 million barrels last week, while gasoline supplies expanded by 4.63 million barrels. Meanwhile, a Bloomberg survey ahead of the government data Wednesday shows crude inventories probably increased by 3.1 million barrels, a third-weekly gain after a record run of declines.
“Crude oil prices will face severe pressure in the near term as rising U.S. rig countand inventories are expected to hamper OPEC’s collective efforts,” Avtar Sandu, a senior commodities manager at brokerage Phillip Futures Pte said in an emailed note Wednesday.
Other oil-market news:
- Oil’s big price rally hasn’t translated into a huge bonanza for independent U.S. explorers just yet.
- Occidental Petroleum Corp., the top oil producer in the Permian Basin, is boosting spending to expand further into America’s most prolific field as majors like Exxon Mobil Corp. and Chevron Corp. threaten its dominance.
- U.S. tight oil production is set to grow by 2 million barrels a day by 2019, according to Wood Mackenzie Ltd.
Sources and photo-credits: Bloomberg with assistance by Stephen Stapczynski