02/03/2018 07:31 AST
Oil traded below $62 a barrel after falling the most in almost three weeks as US data showed inventories and supplies both surged, amplifying investors’ concerns of a global glut.
Futures in New York were little changed, after losing 3.6 per cent in the previous two sessions. US crude stockpiles rose to the highest level since December, exceeding analysts’ forecasts, while gasoline reserves expanded at four times the predicted rate. Meanwhile, a shale boom sent US production to a record high in November.
Oil has erased most of the gains it had made since the start of the year as fears of swelling stockpiles bundled with record levels of production in the US threatens efforts by the Organisation of Petroleum Exporting Countries and its allies to curb a global oversupply. While an Opec committee concluded last month that the oil market rebalance was quickening, the group’s head will meet with American shale company executives for dinner on Monday in Houston.
“Traders are hypersensitive to crucial inventories data, especially topside builds given the market’s refocusing on shale output,” Stephen Innes, head of Asia-Pacific trading at Oanda Corp in Singapore, said in an emailed note. The US remaining “on course to be the world’s largest oil producer has prices convincingly moving lower”.
West Texas Intermediate for April delivery added 9 cents, or 0.2 per cent, to trade at $61.73 a barrel on the New York Mercantile Exchange at 3.40pm in Singapore. Prices slumped 2.2 per cent on Wednesday for their biggest decline since February 9. Total volume traded was about 46 per cent above the 100-day average.
Brent for May settlement rose 17 cents to $64.90 on the London-based ICE Futures Europe Exchange. The contract fell 2.7 per cent, or $1.79, on Wednesday. Front-month futures traded at a $3.32 premium to May WTI.
US stockpiles of oil stored in tanks and terminals rose by 3.02 million barrels to about 423 million, the fourth increase in five weeks, according to the Energy Information Administration on Wednesday. That compares to a median estimate for a three-million-barrel gain in an earlier Bloomberg survey. Gasoline inventories rose by 2.48 million barrels, versus an average estimate for an increase of 600,000 barrels.
As for production, US output reached a record high in November, bypassing Saudi Arabia late last year to nip Russia, the world’s largest producer, at the heels. That’s helped boost American exports, with the combined shipments of crude, gasoline and distillates all expanding to total 7.3 million barrels a day in December, the largest volume ever in EIA data.
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