U.S. Oil Prices Fall to Fresh Six-Year Lows
Oil prices fell further in Asian trade Wednesday with U.S. crude posting fresh six-year lows on mounting worries over rising supplies.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at $42.62 a barrel at 0306 GMT, down $0.84 in the Globex electronic session, extending losses from the previous trading session.
Brent crude for May delivery on London’s ICE Futures exchange fell $0.21 to $53.30 a barrel, after falling 0.80% on Tuesday.
Oil prices have been falling since mid-2014 but the decline had stalled in February, raising expectations that prices had bottomed out. But oil started tumbling again this month on the back of surging U.S. production.
U.S. oil prices have now fallen to their lowest since early 2009, erasing February’s gains as surplus crude in storage touches record highs.
Late Tuesday, the American Petroleum Institute, an industry group, said its data showed U.S. crude stockpiles rose by a massive 10.5 million barrels in the week ended March 13.
The more definitive inventory survey data from the U.S. Energy Information Administration is due later Wednesday, and analysts expect oil inventories to have risen by 4.1 million barrels.
The oil glut has raised concerns about the availability of storage space. Societe Generale said last week that the one location where storage is truly tight is the U.S. oil hub at Cushing, Oklahoma–the delivery point for Nymex crude.
“Capacity is only 73% full, but in absolute terms, there is only 19 million barrels of space remaining,” Societe Generale had said.
Meanwhile, Algeria’s invitation to fellow oil producers to discuss a concerted response to falling prices as part of ” consultative meeting” in Algiers on March 16 went largely ignored, with only Angola responding.
Trade data showed that Saudi Arabia pumped more crude in January-February, boosting the production of the core Arab Gulf members of OPEC and offsetting a decline in Iraqi output. This contributed to downward pressure on oil prices in March.
The fact that their oil production rose in February, when prices were rallying, confirms the fact that Arab Gulf oil producers sold more crude during the rally, forcing prices down again, said Georgi Slavov, head of commodities research at Marex Spectron.
Phillip Futures said U.S. oil prices are also down due to the upcoming expiry of the April WTI contract. Investors are also watching the U.S.-Iran nuclear talks and the FOMC decision due today.
Nymex reformulated gasoline blendstock for April–the benchmark gasoline contract–fell 115 points to $1.7186 a gallon, while April diesel traded at $1.6913, 26 points lower.
ICE gasoil for April changed hands at $510.75 a metric ton, up $1.75 from Tuesday’s settlement.
Source: nasdaq – U.S. Oil Prices Fall to Fresh Six-Year Lows
