Oil declines as spare U.S. supplies menace OPEC's anti-glut plan
NEW YORK (Bloomberg) -- Oil dropped as expanding U.S. stockpiles knocked the steam out of the OPEC-led effort to drain a worldwide glut.
Crude lost as much as 1.4% on Wednesday in New York. Inventories in American tanks and terminals probably increased by 3 MMbbl last week, according to a Bloomberg survey. If a government report on Thursday confirms the estimate, it would be the fourth straight weekly gain, the longest expansion since the first quarter of 2017. Spare supplies are increasing against the backdrop of record output by U.S. drillers.
OPEC has “taken a lot of production off the table, but it’s just being replaced by U.S. production to a large degree,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. Cartel members recently sought to reassure investors about their resolve but “the market’s not buying it.”
Oil has struggled to regain January’s highs as faltering confidence in the outlook for economic growth and a strengthening dollar reduced the appeal of commodities. The Organization of Petroleum Exporting Countries has reiterated not just its commitment to curbing an oversupply, but possibly even extending its alliance with Russia beyond this year.
West Texas Intermediate for April delivery fell 30 cents to $61.49/bbl on the New York Mercantile Exchange as of 9:47 a.m. local time. Total volume traded was about 27% below the 100-day average.
Brent for April settlement slipped 9 cents to $65.16 on the London-based ICE Futures Europe exchange. The global benchmark traded at a $3.67 premium to WTI.
The outlook for U.S. oil production in both 2018 and 2019 is “phenomenal,” Deputy Energy Secretary Dan Brouillette said in an interview Tuesday. The nation’s crude inventories have rebounded since late January and kept above 420 MMbbl this month, according to Energy Information Administration data.
The Energy Information Administration is scheduled to release its weekly inventory report Thursday, a day later than usual due to the U.S. President’s Day holiday earlier this week. Weekly figures from the American Petroleum Institute, an industry group, are scheduled for release after regular trading closes on Wednesday.
The Bloomberg Dollar Spot Index, a gauge of the currency against 10 major peers, rose 0.1% for a fourth day of gains.
