Oil was poised for the first weekly decline since mid-February as US crude stockpiles expanded again, keeping supplies at the highest level in more than eight decades.
Futures fell as much as 3.7 percent in New York after slumping 4 percent Wednesday. Inventories rose by more than three times what was projected in a Bloomberg survey, while imports last week increased to the highest since June 2013, Energy Information Administration data showed. Oil also dropped as renewed prospects for higher U.S. interest rates boosted the dollar, cutting the appeal of commodities as an alternative investment.
“There’s some follow-through from yesterday because that number was so huge,” said Bob Yawger, director of the futures division at Mizuho Securities USA in New York. “The dollar is stronger on speculation the next interest rate increase won’t be that far off, putting pressure on the commodity.”
Oil tumbled to a 12-year low last month before rebounding on speculation the global surplus will ease as U.S. production declines and major producers including Saudi Arabia and Russia proposed an output freeze. Iraq and the United Arab Emirates joined the list of confirmed attendees at a meeting between major exporters in Doha next month.
West Texas Intermediate oil for May delivery dropped 97 cents, or 2.4 percent, to $38.82 a barrel at 11:13 a.m. on the New York Mercantile Exchange. The contract fell 4 percent to $39.79 Wednesday. Total volume traded was 8.9 percent below the 100-day average. Front-month prices are down 1.6 percent this week.
Brent for May settlement fell 64 cents, or 1.6 percent, to $39.83 a barrel on the London-based ICE Futures Europe exchange. Prices are down about 4 percent this week. The global benchmark crude was at a $1.01 premium to WTI.
Both Nymex and ICE will be closed on Friday for the Good Friday holiday.
U.S. crude stockpiles increased by 9.36 million barrels to 532.5 million, the highest level since 1930, EIA data showed Wednesday. Imports rose for the first time in three weeks to 8.38 million barrels a day. Production fell to 9.04 million a day, the lowest level since November 2014.
“The big jump in crude stocks reported yesterday comes down to higher oil imports,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. “The arbitrage has been strong enough to draw barrels into the U.S. Gulf Coast, which is where we saw the biggest increase in stockpiles.”
Crude supplies at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, dropped for the first time in eight weeks, falling from a record.
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