Futures declined 0.8 percent in New York. While Saudi Arabia’s February crude shipments fell again, indicating OPEC’s top producer is cutting deeper than it pledged, U.S. stockpiles expanded by 1.5 million barrels last week. Still, Citigroup Inc. said the increase in American inventories was “muted” compared with earlier gains and may peak as refineries restart after maintenance.
As the Organization of Petroleum Exporting Countries and 11 other nations reduce supply in an effort to end a three-year glut, U.S. producers are ramping up and potentially offsetting the curbs. That has so far subdued price swings, sending the Chicago Board Options Exchange Crude Oil Volatility Index on Wednesday to the lowest since October 2014. While refinery demand has risen with easing seasonal maintenance, it could be a week or two before processing begins increasing steadily, according to Citigroup.
For anyone with a bearish outlook “it is probably hard to resist hitting the sell button,” said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd. in London. “Nationwide crude oil stocks are at their highest.”
West Texas Intermediate for April delivery dropped 41 cents to $53.42 a barrel on the New York Mercantile Exchange at 9:39 a.m. in London. Futures traded between $51.22 and $54.94 in February, the tightest range since August 2003. Prices dropped 18 cents to $53.83 a barrel on Wednesday. Total volume traded was about 9 percent below the 100-day average.
Brent for May settlement fell 39 cents to $55.97 a barrel on the London-based ICE Futures Europe exchange. Prices declined 15 cents to $56.36 on Wednesday. The global benchmark crude traded at a $2.12 premium to May WTI.
See also: Record U.S. crude stockpiles present OPEC with stumbling block
U.S. oil inventories last week rose to 520.2 million, the most in weekly data going back to 1982. They have increased by more than 41 million barrels since the start of the year. Supplies at Cushing, Oklahoma, the delivery point for WTI, gained 495,000 barrels to 63.5 million last week. The nation’s crude production was 31,000 barrels higher at 9.03 million barrels a day, the Energy Information Administration reported Wednesday.
Saudi Arabia, the world’s biggest crude exporter, shipped 7.04 million barrels a day in February, a drop of 126,000 barrels a day from January, vessel-tracking data compiled by Bloomberg show. Measured against the country’s own figures, outflows are down by about 1 million barrels a day since December.
- The options market shows traders were becoming less concerned about a sharp fall back in crude prices.
- Exxon Mobil Corp. is trading in long-term projects that pump oil over decades for U.S. shale drilling that can be switched on or off as crude prices change.
- Perhaps more than any other OPEC nation, Venezuela needs an extension of the oil production agreement that has revived slumping crude prices this year. But its old rival, the U.S., may prevent a longer deal from happening.