Oil Slump Extends to a Fifth Week as Global Glut Seen Expanding
Oil trading near the lowest price in six years is headed for a fifth weekly drop amid signs the global supply glut is worsening.
Futures were little changed in New York after falling for the seventh time in eight days on Thursday. The Organization of Petroleum Exporting Countries needs to keep its output target unchanged to maintain market share, said Kuwait, the group’s third-largest producer. Iran may increase oil exports within months of reaching a deal on its nuclear program, according to U.S. and European officials.
Oil has renewed its slump after losing almost 50 percent last year as U.S. crude stockpiles expand to the highest level in more than three decades, even as drillers idled the number of active rigs to the fewest since 2011. OPEC maintained its quota at 30 million barrels a day in November, resisting calls to curb output amid surging supply from shale producers.
“The demand-supply imbalance is going to need to be fixed by an adjustment to supply,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone. “Traders are waking up to the harsh reality of the U.S. inventory builds and it’s getting difficult to ignore that.”
West Texas Intermediate for April delivery was at $43.80 a barrel in electronic trading on the New York Mercantile Exchange, down 16 cents, at 4:08 p.m. Sydney time. The contract, which expires on Friday, closed at $43.46 on March 17, the lowest since March 2009. Front-month prices have decreased 18 percent this year.
OPEC Policy
WTI’s more active May contract was unchanged at $45.53 a barrel. The volume of all futures traded was about 58 percent below the 100-day average.
Brent for May settlement was 20 cents higher at $54.63 a barrel on the London-based ICE Futures Europe exchange. It slid $1.48 to $54.43 on Thursday. The European benchmark crude traded at a premium of $9.14 to WTI for the same month, compared with $9.83 on March 13.
OPEC, which supplies about 40 percent of the world’s crude, has no plans for an extraordinary meeting to discuss ways to shore up prices, Kuwait Oil Minister Ali Al-Omair said in Kuwait City. The 12-member group, scheduled to gather on June 5, pumped 30.6 million barrels a day in February, exceeding its quota for a ninth straight month, data compiled by Bloomberg show.
World powers have offered to suspend restrictions on Iran’s oil exports if the Islamic Republic accepts strict limits on its nuclear program for at least a decade, said U.S. and European officials who spoke on condition of anonymity.
U.S. Supply
Crude stockpiles in the U.S., the world’s biggest oil consumer, rose by 9.62 million barrels to 458.5 million through March 13, according to the Energy Information Administration. That’s the highest level in weekly records from the Energy Department’s statistical arm dating back to August 1982. Production accelerated to 9.42 million a day, the fastest pace since at least January 1983.
Supplies at Cushing, Oklahoma, the delivery point for WTI contracts, climbed by 2.87 million barrels to 54.4 million, the highest level since April 2004, the EIA said.
WTI may extend its drop next week, according to a Bloomberg News survey. Seventeen of 32 analysts and traders, or 53 percent, forecast futures will fall through March 27, while eight respondents predict a price advance.
Brent’s weekly relative strength index is sliding to near a six-week low of 30.3, data compiled by Bloomberg show. A reading below 30 typically signals the market is oversold and further losses probably aren’t sustainable.
Source: Bloomberg – Oil Slump Extends to a Fifth Week as Global Glut Seen Expanding
