Higher U.S. stockpiles send oil prices downward
Oil dropped as U.S. stockpiles were forecast to have expanded for a fourth week, raising questions about OPEC’s success in draining a global oversupply.
According to Bloomberg, crude in New York lost as much as 1.4 per cent and inventories in America rose by 3 million barrels last week. Oil has struggled to regain January’s highs as equities remain weak and a stronger dollar reduces the appeal of commodities priced in the U.S. currency.
The Organization of Petroleum Exporting Countries has reiterated not just its commitment to rebalancing the oil market, but possibly even extending the alliance with Russia beyond this year. Yet, traders’ are primarily focused on U.S. supplies, according to Saxo Bank A/S.
“U.S. inventories, which are surveyed to show a rise, together with weaker stocks and a stronger dollar, are pushing oil lower,” Ole Hansen, head of commodities strategy at Saxo, told Bloomberg News. “It could signal some renewed short-term weakness.”
West Texas Intermediate for April delivery fell 72 cents to US$61.07 a barrel on the New York Mercantile Exchange as of 10:09 a.m. London time. Total volume traded was about 18 per cent below the 100-day average. The March contract expired Tuesday after adding 22 cents to US$61.90.
Brent for April settlement slipped 69 cents to US$64.56 a barrel on the London-based ICE Futures Europe exchange. Prices dropped 0.6 per cent to US$65.25 on Tuesday. The global benchmark traded at a $3.49 premium to WTI.
The outlook for U.S. oil production in both 2018 and 2019 is “phenomenal,” Deputy Energy Secretary Dan Brouillette said in an interview with Bloomberg on Tuesday. The nation’s crude inventories have rebounded since late January and kept above 420 million barrels this month, according to Energy Information Administration data.