Oil extended its decline for a second day as U.S. crude stockpiles unexpectedly increased, keeping supplies at the most in more than eight decades.
Futures slid as much as 1.6 percent in New York after falling from the highest level in seven months on Wednesday amid a surging U.S. currency. Inventories increased by 1.3 million barrels last week, according to government data. Rain in Canada may slow fires that have shifted back toward oil-sands operations. The Bloomberg Dollar Spot Index rose after the Federal Reserve published minutes of its latest monetary policy suggesting a June hike is possible.
Crude has surged more than 80 percent since slumping to the lowest in 12 years earlier this year on signs the global glut will ease as U.S. output declines. OPEC’s strategy to defend market share is working, Kuwait’s acting oil minister said in an interview Wednesday and the market moved into a deficit earlier than expected, according to Goldman Sachs Group Inc.
“While the demand-supply outlook has improved, oil has had a very substantial rise and we are getting toward the stage where high inventories and producer hedging are probably likely to cap the rally,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “The sharply higher U.S. dollar has seen momentum steady.”
West Texas Intermediate for June delivery, which expires Friday, fell as much as 78 cents to $47.41 a barrel on the New York Mercantile Exchange and was at $47.60 at 1:33 p.m. Singapore time. Total volume traded was about 27 percent above the 100-day average. The more-active July contract slid as much as 85 cents to $47.93.
Crude Stockpiles
Brent for July settlement lost as much as 91 cents, or 1.9 percent, to $48.02 a barrel on the London-based ICE Futures Europe exchange. The contract fell 35 cents to $48.93 on Wednesday. The global benchmark crude traded at a premium of 9 cents to WTI for July.
U.S. crude inventories climbed to 541.3 million barrels, near the highest since October 1929, according to the Energy Information Administration. Supplies were projected to decrease by 3.5 million barrels, according to the median estimate of analysts surveyed by Bloomberg. Gasoline consumption was at 9.56 million barrels a day in the four weeks ended May 13, the highest seasonal level in at least a decade, according to the EIA.
Oil-market news:
Oil will end the year at $50 a barrel and the market will rebalance in the third or fourth quarter, said Anas Al-Saleh, Kuwait’s acting oil minister. Saudi Arabia’s crude oil stockpiles fell in March for the fifth month in a row reaching the lowest level in 18 months, according to data published on the website of the Riyadh-based Joint Organisations Data Initiative. The oil rally has more legs as prices are yet to reflect the millions of barrels lost to supply disruptions, Australia & New Zealand Banking Group Ltd. said in an e-mailed note. Venezuela’s oil supply risks may be “overstated,” Morgan Stanley said.
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