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Wed 27 Jan 2016 09:38 AM

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Oil resumes decline near $30 as US supplies worsen global glut

Crude is down 17% this year as volatility in global markets adds to concern over brimming US stockpiles and the outlook for increased exports from Iran

Oil resumes decline near $30 as US supplies worsen global glut
(Getty Images)

Oil resumed its decline near $30 a barrel after U.S. industry data showed crude stockpiles increased, exacerbating a global glut.

Futures slid as much as 3.7 percent in New York. Inventories surged by 11.4 million barrels last week, the industry-funded American Petroleum Institute was said to report. If government data on Wednesday - which is forecast to show a 4 million-barrel rise - shows an equivalent rise, it would be the largest increase in weekly reports since May 1996.

“The US inventory number is going to keep a lid on any strong rally,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “Volatility will continue. Until we see actual production cuts, it’s going to be difficult for the market to sustain any advance.”

Crude is down 17 percent this year as volatility in global markets adds to concern over brimming US stockpiles and the outlook for increased exports from Iran after the removal of international sanctions. Independent American oil explorers are forecast to report 2015 losses totalling almost $14 billion amid the price collapse, according to data compiled by Bloomberg.

West Texas Intermediate for March delivery fell as much as $1.15 to $30.30 a barrel on the New York Mercantile Exchange, erasing Tuesday’s 3.7 percent gain. The contract was at $30.64 a barrel at 11:20 a.m. Hong Kong time. Total volume traded was about 17 percent above the 100-day average.

Brent for March settlement lost as much as 67 cents, or 2.1 percent, to $31.13 a barrel on the London-based ICE Futures Europe exchange. The contract added $1.30, or 4.3 percent, on Tuesday. The European benchmark crude traded at a premium of 49 cents to WTI.

Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, fell by 660,000 barrels last week, the API reported Tuesday, according to to a person familiar with the data. Nationwide supplies are forecast to increase for a third week, a Bloomberg survey showed before an Energy Information Administration report Wednesday.

Hess Corp. starts earnings season for the U.S. explorers on Wednesday, with analysts predicting an annual loss of $1.6 billion, its worst performance in at least 28 years. It will be followed by peers including Murphy Oil Corp. and Anadarko Petroleum Corp.

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