Oil price slips on bulging U.S. crude stocks, ample global supplies
Oil prices weakened further on Wednesday as data showed a rise in U.S. crude inventories and record supplies in the rest of the world cast doubt over OPEC’s ability to cut output and tighten the market.
U.S. West Texas Intermediate (WTI)
North Sea Brent crude
Market players pointed to the American Petroleum Institute’s (API) U.S. inventory data, issued late on Tuesday, as weighing on prices. Not only did the report show crude oil stocks rose 897,000 barrels in the week to April 21, defying expectations of a 1.7 million barrel draw, but it also showed a large build in gasoline stocks, unusual for this time of the year.
“Should these figures be mirrored by the EIA, widespread concerns over stubbornly high OECD oil stocks will have been justified in what would be a setback to the global oil rebalancing process,” analysts at PVM said.
The U.S. Energy Information Administration (EIA) will issue its inventory data at 1430 GMT on Wednesday.
Both Brent and WTI prices pared losses and came close to flat after Saudi Energy Minister Khalid al-Falih said his country was interested in further talks between the Organization of the Petroleum Exporting Countries and non-OPEC producers to stabilise oil prices.
OPEC and a group of other producing countries, including Russia but excluding the United States, have pledged to cut output by 1.8 million barrels per day (bpd) during the first half of the year in order to rein in years of oversupply and prop up prices.
Yet prices have largely slumped this year as U.S. inventories remained brimming and global fuel supplies set new records, despite the pledges to cut output.
The average value of the Brent crude forward curve <0#LCO:> has fallen by over $5 per barrel since the start of the year, when an OPEC-led supply cut started.
The slump in Brent is a result of record crude oil volumes in circulation on ships around the world, despite the cuts.
Thomson Reuters Eikon shipping data showed 50 million bpd have been booked for shipment on tankers this month, up 10 percent since last December, contributing to rising stocks not just in the United States but in key markets like Japan.
Source: Reuters (By Sabina Zawadzki; Additional reporting by Henning Gloystein in Singapore)