Oil traded below $50 a barrel before US government data forecast to show crude inventories expanded from a record high.
Futures advanced as much as 0.9 percent in New York. Stockpiles probably expanded by 3.95 million barrels last week, according to a Bloomberg News survey before an Energy Information Administration (EIA) report on Wednesday. They rose over the prior seven weeks to 434.1 million, the most in data compiled by the Energy Department’s statistical arm starting August 1982.
Prices have dropped 6.4 this year, after plunging almost 50 percent in 2014, as global supply outpaces demand amid increased US output. Data on Monday showed US manufacturing expanded at a slower pace in February, as weaker overseas growth limited orders. Central banks outside the US are boosting stimulus to revive their economies, with the euro area’s asset-purchase program set to begin as early as this week.
“The fundamental picture still has questions about how much supply is coming on,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “There is mixed economic data from the US, but overall the confidence is there, compared with what’s happening in Europe. That’s created a balanced environment for oil.”
West Texas Intermediate (WTI) for April delivery rose as much as 42 cents to $50.01 a barrel in electronic trading on the New York Mercantile Exchange and was at $49.86 at 1:44 p.m. Sydney time. The contract slid 17 cents to $49.59 on Monday. The volume of all futures traded was about 63 percent below the 100-day average.
Crude supplies
Brent for April settlement was 67 cents higher at $60.21 a barrel on the London-based ICE Futures Europe exchange. The contract fell $3.04, or 4.9 percent, to $59.54 on Monday. The European benchmark crude was at a premium of $10.34 to WTI. It closed at $12.82 on February 27, the widest gap since January 2014.
US crude stockpiles have surged above the five-year average level for this time of the year, according to the EIA. Supplies probably increased to 438 million through February 27, the median estimate of six analysts surveyed by Bloomberg showed.
The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked shale formations from Texas to North Dakota. The US pumped 9.29 million barrels a day through February 20, the highest level in weekly data from the EIA since January 1983.
WTI may fall as low as $32 a barrel because support from heating-oil demand will fade as winter ends, Bank of America Corp. said in a note on Monday. Prices climbed in February for the first monthly gain since June, amid unseasonably cold weather even as US crude stockpiles and production rose to records.
Bloomberg News