Oil Slips From 5-Month High Amid Ample U.S. Supply, OPEC Doubtsby
U.S. crude supply at 86-year high, output at 18-month low: EIA
Door is open for future production cooperation: Saudi adviser
Oil fell from the highest level in almost five months amid rising U.S. crude stockpiles and speculation producers will be unable to agree on an output freeze.
Futures dropped 2.3 percent in New York. Crude supplies rose to 538.6 million barrels last week, the most since 1930, the Energy Information Administration reported Wednesday. Oil surged Wednesday after the EIA said U.S. crude output fell to an 18-month low. Cooperation between producers is still possible, said Saudi Oil Ministry adviser Ibrahim Al-Muhanna.
"The market is catching its breath after a strong rally," said Gene McGillian, a senior analyst and broker at Tradition Energy in Stamford, Connecticut. "We have a huge oil oversupply in storage."
Talks to freeze supply between some of the world’s largest producers in Doha on Sunday failed after Saudi Arabia said it wouldn’t restrain output without commitments from all Organization of Petroleum Exporting Countries members including Iran, which has ruled out a cap for now. Crude’s slump has sent the number of active oil rigs in the U.S. to the lowest since November 2009.
West Texas Intermediate for June delivery fell $1 to settle at $43.18 a barrel on the New York Mercantile Exchange. The May contract, which expired Wednesday, rose 3.8 percent to $42.63, the highest close since Nov. 25.
Brent crude for June settlement slipped $1.27, or 2.8 percent, to $44.53 a barrel on the London-based ICE Europe Futures exchange. Prices rose 4 percent to $45.80 on Wednesday, also the highest since Nov. 25. The global benchmark closed at a $1.35 premium to WTI.
The drop in prices accelerated as U.S. equities slipped and the dollar rebounded. The Standard & Poor’s 500 Index dropped from a four-month high.
The dollar rebounded versus the euro after the European Central Bank kept its main interest rates on hold and President Mario Draghi said the ECB remains ready to step up stimulus if the euro-area outlook worsens. A stronger dollar makes commodities priced in the currency less attractive as a store of value.
Kuwait’s oil production is almost back to capacity one day after a strike by workers ended. OPEC’s fourth-largest producer boosted output to 2.9 million barrels a day on Thursday, acting Oil Minister Anas Al-Saleh said in a letter posted on state-run Kuwait Petroleum Corp.’s Twitter account. Capacity is 3 million barrels a day, according to data compiled by Bloomberg. Production was 1.5 million barrels on Tuesday, one day before the strike ended.
Libya will unite the two rival factions of its state oil producer in the next few weeks as the country seeks to triple production to 1 million barrels a day, the National Oil Co. Chairman Mustafa Sanalla said at a conference in Paris. Output could double within weeks of a political pact, he said.
Other oil-market news:
- Nigeria will push fellow OPEC members for an oil-output freeze when the group holds its next meeting in June, Petroleum Minister of State Emmanuel Kachikwu said on Wednesday.
- Petroleo Brasileiro SA says March oil output fell 3 percent from the previous month to 2.02 million barrels a day.