Azernews.Az

By Bloomberg

Oil fell for a second day before U.S. government data that’s forecast to show crude stockpiles expanded further from a record.

Futures slid as much as 1.3 percent in New York, extending Tuesday’s 2.2 percent decline. Crude inventories probably increased by 3.2 million barrels last week, a Bloomberg survey of analysts showed before an Energy Information Administration report on Wednesday. Venezuelan officials met with Saudi Arabia’s Deputy Oil Minister Abdulaziz Bin Salman to discuss stabilizing the market.

Oil’s rebound from a six-year low in March has stalled amid burgeoning U.S. crude stockpiles that are at the highest level in 85 years, even as drillers reduced the number of active rigs by half since December. OPEC’s reluctance to cut output is an attempt to find the most economic price for oil, not an attack on American shale producers, according to Exxon Mobil Corp. Chief Executive Officer Rex Tillerson.

“The market has a restrained capacity to rally and there’s potential for further downside,” David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone. “Constraints are continued overproduction and the huge inventories in the U.S. We’ve seen enough to get the price off the bottom but there are still significant headwinds.”

West Texas Intermediate for June delivery dropped as much as 76 cents to $55.85 a barrel in electronic trading on the New York Mercantile Exchange, and was at $55.94 at 2:13 p.m. Sydney time. The May contract expired Tuesday after decreasing $1.12 to $55.26. Total volume was about 54 percent below the 100-day average. Prices have gained 5 percent this year.

Crude Stockpiles

Brent for June settlement fell as much as 52 cents, or 0.8 percent, to $61.56 a barrel on the London-based ICE Futures Europe exchange. It lost $1.37 to $62.08 on Tuesday, the lowest close in a week. The European benchmark crude traded at a premium of $5.61 to WTI.

Crude inventories in the U.S., the world’s biggest oil consumer, rose to 483.7 million barrels through April 10, 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 dating back to 1920.

Stockpiles climbed by 5.5 million barrels in the week ended April 17, the industry-funded American Petroleum Institute in Washington reported Tuesday.

OPEC ‘Exercise’

Venezuelan officials including Oil Minister Asdrubal Chavez and Finance Minister Rodolfo Marco Torres arrived in Saudi Arabia on Tuesday for talks, the foreign ministry said on its Twitter account. Both nations are members of the Organization of Petroleum Exporting Countries, which pumps about 40 percent of the world’s crude.

Saudi Arabia led OPEC’s decision in November to maintain its collective production target at 30 million barrels a day, even as U.S. output surged to a record amid a shale boom. The 12-member group is engaged in “a classic price-discovery exercise” to find the price at which it will no longer have to compete with supplies from higher-cost producers, Tillerson said during the IHS CERAWeek conference in Houston on Tuesday.

U.S. drillers seeking oil have cut the number of active machines to 734 through April 17, the fewest since November 2010, according to Baker Hughes Inc. The rig count has slid the past 19 weeks, data from the oilfield-services company showed.