Crude Oil Trades Near Two-Week Low Before U.S. Supply ReportMoming Zhou
Oil traded near the lowest close in almost two weeks in New York before government data that may signal the pace of supply growth in the U.S.
West Texas Intermediate traded below $50 a barrel. U.S. crude stockpiles probably increased by 4.75 million barrels in the week through March 6, a Bloomberg News survey showed before a report from the Energy Information Administration on Wednesday. Inventories fell 404,000 barrels, the American Petroleum Institute said, according to a person familiar with the data.
Oil is failing to sustain a rebound this year amid speculation that a global supply glut that drove prices into a bear market in 2014 may worsen. U.S. crude production and inventories have surged to the highest levels in more than three decades, according to the EIA. The number of rigs drilling for oil fell for a 13th week to 922 as of March 6, according to services company Baker Hughes Inc.
“We are trying to get a handle on what’s happening with inventories,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The market is kind of stunned that we saw a drawdown in the API report. The reason why that’s important is because the bears have been resting their main case on rising inventories.”
WTI for April delivery slid 8 cents to $48.21 a barrel at 9:59 a.m. on the New York Mercantile Exchange. The volume of all futures traded was about 28 percent below the 100-day average for the time of day.
Brent for April settlement climbed 19 cents to $56.58 on the ICE Futures Europe exchange. The European benchmark crude traded at a premium of $8.35 to WTI.
Crude inventories in the U.S., the world’s largest oil consumer, expanded to 444.4 million barrels in the week ended Feb. 27, according to the EIA, the Energy Department’s statistical arm. That’s the highest level in records dating back to August 1982 and 25 percent above the five-year average for this time of year.
WTI will trade at $52.15 a barrel this year versus a February projection of $55.02, the EIA said on Tuesday in its monthly Short-Term Energy Outlook. Production will climb to 9.35 million a day in 2015, up 50,000 barrels from last month’s estimate.