Oil declines as rising US crude stockpiles expand global glut

Oil declined, as rising US crude stockpiles kept supplies at the highest level in more than eight decades.

Futures slid as much as 1.5 percent in New York, after closing little changed on Wednesday. Inventories expanded for a seventh week to 534.8 million barrels, according to a report from the Energy Information Administration (EIA). Imports and production dropped. Ecuador and Venezuela will support a cut to output at a meeting between major exporters in Doha next month, Ecuador’s Oil Minister Carlos Pareja said in a post on the ministry’s Twitter account.

Oil is up about 12 percent in March, after rebounding from a 12-year low last month amid speculation the global surplus will ease as US output declines. Saudi Arabia, Russia, Qatar and Venezuela agreed in February they would cap production at January levels if other producers followed suit to tackle the oversupply. They’ll meet again with other countries in Doha on April 17.

“The rally was overdone and the expectation is for a further moderation of prices,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “While the outlook is more constructive for energy markets over the next 12 months, the current supply imbalance and the huge inventories mean it’s very hard to get too positive on oil prices anytime soon.”

West Texas Intermediate for May delivery fell as much as 58 cents to $37.74 a barrel on the New York Mercantile Exchange and was at $37.86 at 12:09 p.m. Hong Kong time. The contract gained 4 cents to $38.32 Wednesday. Total volume traded was about 8 percent below the 100-day average. Prices are 2.2 percent higher this quarter.

US stockpiles

Brent for May settlement, which expires Thursday, dropped as much as 45 cents, or 1.2 percent, to $38.81 a barrel on the London-based ICE Futures Europe exchange. Prices have gained 8.2 percent this month and 4.4 percent this quarter. The more actively traded June contract fell 36 cents to $39.69. The global benchmark crude is trading at a premium of $1.05 to WTI.

US crude inventories increased by 2.3 million barrels last week, the EIA said in a report on Wednesday. Supplies at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, dropped by 272,000 barrels. Production slid for a third week to 9.02 million barrels a day.

Production freeze and oil market news:

Oman will attend a meeting between oil exporters in Doha next month, according to a person familiar with policy who asked not to be identified.

Eni SpA started pumping crude through a pipeline in Nigeria after production was halted following an act of sabotage on March 24, according to the company.

Saudi Arabian Oil Co. is pressing ahead with an expansion of the Khurais oil field despite lower prices, the company’s CEO said. –Bloomberg News