Oil slips to $49 as US crude inventories hit record
LONDON: Oil slipped to $49 a barrel on Wednesday after US crude stocks soared to the highest on record last week, and as a firmer dollar weighed on prices.
The US Energy Information Administration said US crudestocks rose by 8.9 million barrels last week to 406.73 million barrels, the highest level since records began in 1982.
While the build was not quite as large as the 12.7 million barrel increase reported by industry group the American Petroleum Institute on Tuesday, prices remained under pressure despite large draws in gasoline and distillate inventories.
Gasoline stocks fell by 2.6 million barrels while distillate stocks, which include diesel and heating oil, fell by 3.9 million barrels, the EIA said.
"Refined product demand continues to be the sole source of strength for the market, but it is not enough to overcome the tidal wave of crude oil supplies for now," said John Kilduff at Again Capital LLC in New York.
Brent crude oil for March delivery was down 52 cents at $49.08 a barrel by 1550 GMT, having touched an intraday low of $48.65. It hit a near six-year low of $45.19 a barrel two weeks ago.
US crude for March delivery fell $1.17 to $45.06 a barrel, and hit an intraday low of $44.52.
Fast growing US shale output has pushed oil prices almost 60 per cent lower since June, with losses accelerating after the Organization of the Petroleum Exporting Countries said it would not cut output in a bid to preserve its market share.
Analysts at Goldman Sachs said in a note published on Jan. 27 they expected US crude, also known as WTI, to remain near $40 a barrel in the first half of this year.
"(That) should slow supply growth and balance the global oil market by 2016," the Goldman analysts said.
"We then expect oil prices to move to the marginal cost of production," which the bank pegged at $65 a barrel for WTI and $70 a barrel for Brent.
Brent has consolidated in a narrow range just below $50 in the past two weeks as traders assess whether further price falls would push too many small producers out of the market. -Reuters