Oil traded near $41 a barrel before U.S. government data forecast to show rising crude stockpiles kept supplies at the highest level in more than eight decades.
May futures fell as much as 1.2 percent in New York after declining 0.2 percent Tuesday. Inventories probably increased by 2.53 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. This compares to industry data that showed an 8.8 million barrel gain. Libya will skip a meeting between major oil exporters in Doha next month to freeze output, according to a person familiar with the situation.
“The large U.S. crude stockpiles will act as a headwind to price gains,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “If producers can agree to remove some incremental supply from the market at the Doha meeting, what they lose in production, they gain in a price rise and additional revenue. Just talking about a freeze has helped oil move higher.”
Oil slumped to a 12-year low this year before rising on speculation that stronger demand and falling U.S. output will ease a global glut. Supply will respond to low investment and declines across the most important non-OPEC producers, setting the stage for a price recovery in the second half of this year, according to Jefferies Group LLC.
West Texas Intermediate oil for May delivery lost as much as 49 cents to $40.96 a barrel on the New York Mercantile Exchange and was at $41.01 at 10:14 a.m. Hong Kong time. The contract fell 7 cents to $41.45 on Tuesday. Total volume traded was about 54 percent below the 100-day average.
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Brent for May settlement fell as much as 45 cents, or 1.1 percent, to $41.34 a barrel on the London-based ICE Futures Europe exchange. The contract added 25 cents $41.79 on Tuesday. The global benchmark crude traded at a 36-cent premium to WTI.
U.S. crude stockpiles are at 523.2 million barrels, the highest level since 1930, according to EIA data. Supplies at Cushing, Oklahoma, the delivery point for WTI, declined by 1.37 million barrels last week, the American Petroleum Institute reported Tuesday.
Production freeze and oil market news:
- Ecuador has accepted an invitation to attend the meeting of producers from the Organization of Petroleum Exporting Countries and outside the group in Doha on April 17, Oil Minister Carlos Pareja said in a statement on the ministry’s website.
- Libya is the smallest OPEC producer, data compiled by Bloomberg shows.
- There is some recovery in the oil market as demand increases and supply declines, Eni SpA Chief Executive Officer Claudio Descalzi said Tuesday in a Bloomberg Television interview.
–With assistance from Stephen Stapczynski To contact the reporter on this story: Ben Sharples in Hong Kong at firstname.lastname@example.org. To contact the editors responsible for this story: Ramsey Al-Rikabi at email@example.com, Aaron Clark, Ovais Subhani
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