- Drop eased after U.S. oil rig count fell to lowest since 2009
- Iraq, U.A.E. to attend Doha output freeze meeting next month
Oil dropped a second day after U.S. crude stockpiles expanded again, keeping supplies at the highest level in more than eight decades.
Futures fell 0.8 percent in New York after slumping 4 percent Wednesday. Inventories rose by more than three times what was projected in a Bloomberg survey, while imports last week increased to the highest since June 2013, Energy Information Administration data showed. Oil also dropped as renewed prospects for higher U.S. interest rates boosted the dollar, cutting the appeal of commodities as an alternative investment.
"There’s some follow-through from yesterday because that number was so huge," said Bob Yawger, director of the futures division at Mizuho Securities USA in New York. "The dollar is stronger on speculation the next interest rate increase won’t be that far off, putting pressure on the commodity."
Oil tumbled to a 12-year low last month before rebounding on speculation the global surplus will ease as U.S. production declines and major producers including Saudi Arabia and Russia proposed an output freeze. Iraq and the United Arab Emirates joined the list of confirmed attendees at a meeting between major exporters in Doha next month.
West Texas Intermediate oil for May delivery dropped 33 cents to settle at $39.46 a barrel on the New York Mercantile Exchange. Total volume traded was 6.3 percent below the 100-day average. Front-month futures rose 2 cents this week.
Brent for May settlement fell 3 cents to $40.44 a barrel on the London-based ICE Futures Europe exchange. Prices slipped 1.7 percent this week. The global benchmark crude closed at a 98-cent premium to WTI.
Both Nymex and ICE will be closed on Friday for the Good Friday holiday.
Price declines eased after data showed the number of rigs targeting oil fell to the lowest since November 2009. The rig count dropped by 15 to 372 this week, Baker Hughes Inc. data show.
U.S. crude stockpiles increased by 9.36 million barrels to 532.5 million, the highest level since 1930, EIA data showed Wednesday. Imports rose for the first time in three weeks to 8.38 million barrels a day. Production fell to 9.04 million a day, the lowest level since November 2014.
“The big jump in crude stocks reported yesterday comes down to higher oil imports,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. “The arbitrage has been strong enough to draw barrels into the U.S. Gulf Coast, which is where we saw the biggest increase in stockpiles.”
Crude supplies at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, dropped for the first time in eight weeks, falling from a record.
- Iraq supports the proposal by Saudi Arabia and Russia for producers to freeze output at January levels, Oil Ministry spokesman Asim Jihad said by phone, without saying whether the nation will cap its own production.
- The U.A.E. will also attend the meeting to discuss the freeze in Doha on April 17, Energy Minister Suhail Al-Mazrouei said on his Twitter account.
- Iraqi Oil Minister Adel Abdul Mahdi suspended participation in the government and asked a deputy to take over his duties, Deputy Oil Minister Fayyad Al-Nima said.
- PetroChina Co. sees its oil and gas output falling for the first time in 17 years as it shuts high-cost fields that have “no hope” of making profits at current prices, President Wang Dongjin said.
- Oil-well costs in major U.S. shale regions will drop by 3 to 5 percent this year from 2015 levels as producers become more efficient, according to an IHS study compiled for the EIA.