Oil declines as US stockpiles rise

Crude inventories probably rose by 2.5m barrels last week

Oil declined for a third day before US government data forecast to show crude stockpiles expanded further from a record.

Futures fell as much as 1.6 per cent in New York. Crude inventories probably rose by 2.5 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report today. Saudi Arabia said it will keep pumping oil to meet any demand for its supplies, increasing concern a global glut may persist.

Oil’s recovery from a sixyear low in March has faltered as US crude stockpiles continue to increase, even as drillers cut the number of active rigs to the lowest level since October 2010. Russia will meet with Opec before the group gathers in June, according to Alexander Novak, the nation’s energy minister.

“The increase in US crude stocks this year has been massive,” Amrita Sen, chief oil analyst at Energy Aspects Ltd., said by email. “While they will be reduced when refineries return from maintenance, it’s not feasible the market will run down over 100 million barrels of inventories by September, when maintenance increases again.”

Future volumes

West Texas Intermediate for June delivery dropped as much as 92 cents to $56.07 a barrel in electronic trading on the New York Mercantile Exchange and was at $56.84 at 1:21pm. London time. The volume of all futures traded was about 49 per cent below the 100-day average for the time of day. Prices gained 19 per cent this month, trading at a four-month high of $58.41 last week.

Brent for June settlement decreased as much as 93 cents, or 1.4 per cent, to $63.90 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $7.84 to WTI. In the US, the world’s largest oil consumer, crude inventories have expanded the prior 15 weeks to 489 million barrels, the highest level in weekly EIA data that started in August 1982. Supplies haven’t been this high since 1930, according to monthly records from the Energy Department’s statistical arm.