Brent oil halted gains above $40 a barrel as forecasts that U.S. stockpiles would remain at the most since 1930 competed with speculation producers may agree to an output freeze.
Futures in London lost as much as 1.6 percent after closing above $40 for the first time since December on Monday. U.S. supplies probably rose 3.5 million barrels last week, according to a Bloomberg News survey before government data Wednesday. Ecuador’s foreign ministry said Latin American producers will meet on Friday to discuss oil prices, while Russia said last week major suppliers may meet by April 1. China’s crude imports rose to a record in February, while product exports fell to the lowest in nine months.
“Fundamentals are not there yet, but we’ve also seen a change in sentiment now over the past couple of weeks,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said in a Bloomberg Television interview. “The market is starting to believe now we have seen the low.”
Oil in London has advanced more than 40 percent since slumping to a 12-year low in January amid speculation a proposal to freeze production will trim a global glut. A meeting among major producers to discuss capping output may be held in Russia, Doha or Vienna sometime between March 20 and April 1, Russian Energy Minister Alexander Novak said on state television last week.
Brent for May settlement fell as much as 65 cents to $40.19 a barrel on the London-based ICE Futures Europe exchange and traded at $40.30 at 2:40 p.m. Hong Kong time. The contract climbed $2.12 to $40.84 on Monday, the highest close since Dec. 4. The global benchmark crude was at a premium of 99 cents to West Texas Intermediate for May.
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WTI for April delivery dropped as much as 1.5 percent to $37.35 a barrel on the New York Mercantile Exchange. The contract gained $1.98 to $37.90 on Monday, the highest close since Dec. 24. Total volume traded was about 19 percent above the 100-day average.
China increased crude imports by 19 percent in February to 31.8 million metric tons from a month earlier, according to data from the Beijing-based General Administration of Customs on Tuesday. That’s equivalent to about 8.04 million barrels a day, the highest daily average on record. Oil product exports slid a second month to 2.99 million tons.
U.S. stockpiles rise as production falls:
- U.S. crude output fell for a sixth week to 9.08 million barrels a day, according to Energy Information Administration data. Stockpiles are at 518 million barrels, the most since 1930.
- There will probably be a price correction by the end of the year, Suhail Al Mazrouei, energy minister of the United Arab Emirates, said Monday.
- Saudi Arabia, Russia, Qatar and Venezuela agreed last month they would freeze output, if other producers followed suit, in an effort to tackle a global oversupply in the oil market.
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