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By Bloomberg

Brent oil dropped for a fifth day, its longest retreat in almost three months, amid signs that the global supply glut will persist.

Oil fell as much as 2.9 percent in London and 1.9 percent in New York. U.S. crude supplies are projected to have increased from a record high last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Futures also slid after the dollar strengthened on speculation the U.S. is moving closer to raising interest rates.

“U.S. crude inventories rose last week; it’s the size of the gain that we’re uncertain about,” Tom Finlon, director of Energy Analytics Group LLC in Jupiter, Florida, said by phone. “The dollar is strengthening, which makes it very hard to be bullish oil.”

Oil has rebounded after reaching a five-year low in January amid speculation that a global surplus would diminish as the year progresses. Since the start of December, drillers in the U.S. have reduced the number of active rigs seeking oil by 41 percent to 922, the fewest since April 2011, Baker Hughes Inc. data showed.

Brent for April settlement fell $1.62, or 2.8 percent, to $56.91 a barrel on the London-based ICE Futures Europe exchange at 9:20 a.m. New York time. It touched $56.83, the lowest intraday level since Feb. 12. The volume of all futures traded was 10 percent below the 100-day average for the time of day.

Crude Inventories

WTI crude for April delivery slipped 87 cents, or 1.7 percent, to $49.13 a barrel on the New York Mercantile Exchange. Volume was down 24 percent from the 100-day average. The U.S. benchmark crude traded at a $7.83 discount to Brent.

U.S. crude inventories probably expanded 4.75 million barrels in the week ended March 6, according to the median estimate in the Bloomberg survey of eight analysts. Supplies climbed to 444.4 million the prior week, the highest level in weekly EIA records dating back to August 1982.

“The problems of oversupply haven’t gone away,” Michael Hewson, London-based senior market analyst at CMC Markets Plc, said by phone. “Inventories keep on building yet prices haven’t collapsed. It will be interesting to see whether the U.S. has to cut production when it hits its storage capacity.”

Production from six major U.S. shale plays will average 5.6 million barrels a day in April, the EIA said in its monthly Drilling Productivity Report on Monday. That’s up 298 barrels a day from March, the smallest projected gain since February 2011.

Fracking Boom

The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked supplies from shale formations including the Permian and Eagle Ford in Texas and the Bakken in North Dakota.

The Bloomberg Dollar Spot Index rose 0.6 percent at 9:14 a.m. in New York. A stronger U.S. currency lowers the appeal of dollar-denominated commodities as an investment.

The Organization of Petroleum Exporting Countries will keep the same policy at its next meeting in June unless non-OPEC producers agree to collective action, Abdullah bin Hamad al- Attiyah, Qatar’s former minister of energy and industry, said at the Doha Energy Forum Tuesday. For countries in the Persian Gulf, $60 a barrel is not a bad price “if they correct their budgets,” he said.

Kuwait’s governor to OPEC, Nawal al-Fezaia, said at the same conference that oil won’t fall below $40 a barrel because demand will pick up in the second half of the year as economic growth improves in the U.S., China and Europe. She also expected OPEC to maintain its policy as “no big change” is expected in the oil market before June.

Bets on WTI falling below $35 a barrel by June have lost almost 80 percent of their value as futures recovered from a six-year low. June $30 and $35 puts, or wagers that prices will drop below those levels, have declined since January. Prices traded within an $8 range last month, the least since September.