Oil drops to 3-month low on rising global inventory

NEW YORK — Oil tumbled on Tuesday after the Organization of the Petroleum Exporting Countries (OPEC) reported a rise in global crude stocks and a surprise output jump from its biggest member, Saudi Arabia, further pressuring prices that have now erased nearly all gains since OPEC announced output cuts in November.

Even though OPEC made an upward revision to its global demand outlook, signs of even modestly higher Saudi output flustered investors.

US crude fell to its lowest settlement since Nov. 29, the day before the Saudi kingdom led OPEC to cut supplies. Brent settled at its lowest since Nov. 30.

Brent futures dropped below their 200- day moving average for the first time since late November during the session. Brent settled down 43 cents, or 0.80%, at $50.92 a barrel.

US West Texas Intermediate ( WTI) crude lost 68 cents, or 1.40%, to settle at $47.72 per barrel for the seventh daily decline in a row, the longest losing streak since January 2016. It is down almost 11% since March 3.

On technical charts, Brent and WTI both remained in oversold territory for a fifth day in a row, their longest such streaks since November. The Brent frontmonth premium over the corresponding US contract rose to its highest since late January.

Secondary sources had said Saudi output fell in February to 9.797 million barrels per day ( bpd), but Riyadh told OPEC it increased to 10.011 million bpd.

In an effort to dispel market concerns, the Saudi energy ministry said the “difference between what the market observes as production, and the actual supply levels in any given month, is due to operational factors that are influenced by storage adjustments and other month to month variables.”

OPEC’s monthly report said oil stocks in industrialized nations rose in January to 278 million barrels above the five-year average, with US shale and other nonOPEC supply gaining.

“Oil prices have come under renewed pressure after the latest OPEC report showed a rise in global crude inventory despite the cartel deciding to curtail its output,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London.

This week’s data is expected to show another rise in US inventories after last week’s bigger-thanexpected increase.

If so, it would be the 10th consecutive weekly increase in US crude stocks, boosting total inventories, including strategic reserves, further past the 1.22 billion barrel record hit during the week that ended March 3. —