Futures slid as much as 1.8 percent in New York after falling 3.1 percent the previous two sessions. Crude supplies rose by 14.2 million barrels last week, the American Petroleum Institute was said to report Tuesday. Government data Wednesday is forecast to show stockpiles climbed for a fifth week. Oil output from the U.S. will surge next year to the highest level since 1970, according to updated estimates from the Energy Information Administration.
Oil has fluctuated above $50 a barrel since a deal to trim output between the Organization of Petroleum Exporting Countries and 11 other nations took effect on Jan. 1. While OPEC members implement pledged cuts and Russia says its own reductions are ahead of schedule, U.S. production has edged higher as drillers targeting crude boosted the rig count to the most since October 2015.
“There’s a recognition that even with the OPEC production cuts, it’s going to take some time for this large inventory overhang to be reduced to more normal levels,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “It leaves the oil price vulnerable to a move back below $50.”
West Texas Intermediate for March delivery lost as much as 95 cents to $51.22 a barrel on the New York Mercantile Exchange and traded at $51.61 at 12:27 p.m. in Hong Kong. Total volume traded was about 45 percent above the 100-day average. The contract fell 84 cents to $52.17 on Tuesday.
Brent for April settlement dropped as much as 61 cents, or 1.1 percent, to $54.44 a barrel on the London-based ICE Futures Europe exchange. The contract fell 67 cents to $55.05 on Tuesday. The global benchmark crude traded at a premium of $2.42 to April WTI.
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U.S. crude inventories probably rose by 2.5 million barrels last week, according to the median estimate in a Bloomberg survey before an EIA report Wednesday. American oil output will average 9.53 million barrels a day in 2018, up from 9.3 million projected in January, the EIA said in its monthly Short-Term Energy Outlook released Tuesday. Production averaged 8.94 million a day last month.
- Parsley Energy Inc. agreed to pay $2.8 billion for drilling rights in the biggest U.S. oil field as a land rush by oil explorers accelerates.
- Saudi Arabian Oil Co. hired Moelis & Co. to advise on its initial public offering, according to a person familiar with the matter, as it pushes ahead with plans to pursue the world’s biggest share sale.
- OPEC needs to extend output cuts into the second half of this year, Iran’s Fars news agency reported, citing Iranian Oil Minister Bijan Namdar Zanganeh.