New York: Oil dropped after government data showed that US crude stockpiles rose to a record, offsetting Opec’s efforts to drain a global glut.
Crude supplies climbed 1.5 million barrels to 520.2 million barrels, the highest in weekly data going back to 1982. A 3-million-barrel supplies gain was projected by analysts surveyed by Bloomberg before the Energy Information Administration report. Compliance among the 10 Opec members that pledged to cut production rose to 89 per cent, while gains from other members meant total output rose slightly, consultant JBC Energy said.
As the Organisation of Petroleum Exporting Countries and 11 non-member nations work to reduce supply to end a three-year glut, US producers are ramping up, sowing speculation they may fill the gap. That has so far subdued price swings, sending the Chicago Board Options Exchange Crude Oil Volatility Index on Monday to the lowest since October 2014.
“The market’s still in a struggle between Opec cuts and the reality that there’s a lot of oil in storage here,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone. “We need to start seeing supply declines here pretty soon or the market will be in trouble.”
West Texas Intermediate for April delivery slipped 18 cents, or 0.3 per cent, to close at $53.83 a barrel on the New York Mercantile Exchange. Futures bounced between $51.22 and $54.94 in February, the tightest range since August 2003.
Brent for May settlement declined 15 cents, or 0.3 per cent, to $56.36 a barrel on the London-based ICE Futures Europe exchange. The April contract dropped 0.6 per cent to expire at $55.59 on Tuesday. The global benchmark closed at a $2.08 premium to May WTI.
Refinery demand
Refineries boosted the amount of crude they processed for the first time in seven weeks. Refiners typically plan maintenance programs for low-demand periods such as February when there’s a lull between winter preparations and the summer surge of gasoline consumption.
“It’s good to see the build was a little lighter than expected,” Brian Kessens, a managing director and portfolio manager at Tortoise Capital Advisors LLC in Leawood, Kansas, who helps manage $17.1 billion in energy assets, said by telephone. “Refinery utilisation picked up a little bit, which might explain the smaller-than-expected gain.”
Gasoline stockpiles fell 546,000 barrels, while inventories of distillate fuel, a category that includes diesel and heating oil, slipped 925,000 barrels.
