London: Oil declined for a third day before US government data forecast to show crude stockpiles expanded further from a record.

Futures fell as much as 1.6 per cent in New York. Crude inventories probably rose by 2.5 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Saudi Arabia said it will keep pumping oil to meet any demand for its supplies, increasing concern a global glut may persist.

Oil’s recovery from a six-year low in March has faltered as US crude stockpiles continue to increase, even as drillers cut the number of active rigs to the lowest level since October 2010. Russia will meet with Opec before the group gathers in June, according to Alexander Novak, the nation’s energy minister.

“The increase in US crude stocks this year has been massive,” Amrita Sen, chief oil analyst at Energy Aspects Ltd., said by email. “While they will be reduced when refineries return from maintenance, it’s not feasible the market will run down over 100 million barrels of inventories by September, when maintenance increases again.”

West Texas Intermediate for June delivery dropped as much as 92 cents to $56.07 a barrel in electronic trading on the New York Mercantile Exchange and was at $56.84 at 1:21pm. London time. The volume of all futures traded was about 49 per cent below the 100-day average for the time of day. Prices gained 19 per cent this month, trading at a four-month high of $58.41 last week.

Crude Stockpiles

Brent for June settlement decreased as much as 93 cents, or 1.4 per cent, to $63.90 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $7.84 to WTI.

The oil market is in “excellent” condition, said Prince Abdulaziz bin Salman, Saudi Arabia’s deputy oil minister. The world’s biggest exporter seeks to keep customers happy and maintain stability of prices, demand and supply, he said Monday in the eastern city of Khobar. The kingdom boosted output to 10.1 million barrels a day in March, close to a record, the Paris-based International Energy Agency reported April 15.

Saudi Arabia will meet the other 11 members of the Organisation of Petroleum Exporting Countries on June 5 in Vienna to assess the market and production levels. Talks with Russia will take place on June 2-3, Novak said in Moscow on Tuesday.

Output Drop

In the US, the world’s largest oil consumer, crude inventories have expanded the prior 15 weeks to 489 million barrels, the highest level in weekly EIA data that started in August 1982. Supplies haven’t been this high since 1930, according to monthly records from the Energy Department’s statistical arm dating back to 1920.

Production shrank by 18,000 barrels a day to 9.37 million a day, the slowest pace in six weeks, the EIA said. Drillers seeking oil cut the number of active rigs to 703 last week, according to data from Baker Hughes Inc., an oil-services company.

Reports of declining output and reduced rig counts in the four main shale-producing areas have left “no doubt” that the drop in production is set to accelerate, Paul Horsnell, global head of commodities research at Standard Chartered Plc in London, said in a report.