London: Oil dropped as US stockpiles were forecast to have expanded for a fourth week, raising questions about Opec’s success in draining a global oversupply.

Crude in New York lost as much as 1.4 per cent. Inventories in America rose by 3 million barrels last week, according to a Bloomberg survey. Oil has struggled to regain January’s highs as equities remain weak and a stronger dollar reduces the appeal of commodities priced in the US currency.

The Organisation 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 US supplies, according to Saxo Bank A/S.

“US inventories, which are surveyed to show a rise, together with weaker stocks and a stronger dollar, are pushing oil lower,” said Ole Hansen, head of commodities strategy at Saxo. “It could signal some renewed short-term weakness.”

West Texas Intermediate for April delivery fell 72 cents to $61.07 a barrel on the New York Mercantile Exchange as of 10:09am 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 $61.90.

Brent for April settlement slipped 69 cents to $64.56 a barrel on the London-based ICE Futures Europe exchange. Prices dropped 0.6 per cent to $65.25 on Tuesday. The global benchmark traded at a $3.49 premium to WTI.

Crude inventories

The outlook for US oil production in both 2018 and 2019 is “phenomenal,” Deputy Energy Secretary Dan Brouillette said in an interview 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.

The EIA is scheduled to release its latest inventory report Thursday, a day later than usual due to the US Presidents Day holiday earlier this week. Weekly figures from the American Petroleum Institute, an industry group, are due later today.

The Bloomberg Dollar Spot Index, a gauge of the currency against 10 major peers, rose 0.2 per cent for a fourth day of gains. The MSCI World Index, which tracks equities, dropped 0.5 per cent.