U.S. crude inventories rose by 10.5 million barrels to 450 million barrels in the week to March 13, American Petroleum Institute (API) figures showed on Tuesday.
Official inventory data will be issued at 1430 GMT on Wednesday by the U.S. government’s Energy Information Administration (EIA). A Reuters poll showed that analysts had expected a 3.8-million-barrel build. [EIA/S]
Brent for May delivery was down 70 cents at $52.82 per barrel by 1305 GMT after ending the previous session up 7 cents.
U.S. crude for April delivery fell $1.25 to $42.21 per barrel, after hitting a six-year low of $42.05 earlier in the session.
Crude stocks at the Cushing, Oklahoma delivery hub rose by 3 million barrels, the API said.
“That’s a big build, especially given the rate of inventory increases we’ve seen recently,” said Dominic Haywood, oil analyst at Energy Aspects.
“If we continue at this pace, there’s definitely potential to see storage hitting tank tops at Cushing in April or May.”
“Whether the API data is right or wrong, it is still about market expectations or missed expectations,” said Ben LeBrun, a market analyst at Sydney’s OptionsXpress.
The expiry of the Brent contract on Monday and the West Texas Intermediate forward contract on March 20 “is adding a bit of fuel, adding to volatility in the market”, LeBrun said.
Traders on Wednesday are also watching for the U.S. Federal Reserve to outline monetary policy objectives including regarding interest rates.
“If U.S. interest rate hikes would be pushed back, this would likely cause the dollar to weaken, however, only in the short run,” Singapore’s Phillip Futures said in a research note.
Global oversupply concerns have been spurred by factors including U.S. output levels, some recovery in Libya’s production and the potential for a boost in Iran’s exports should Western sanctions be lifted.
There could also be more downward pressure on prices as China pauses its build-up of strategic reserves and Asian refineries slow imports ahead of spring maintenance.
Crude oil exports from Saudi Arabia rose in January to 7.47 million barrels per day, their highest level since April last year, according to data published on Wednesday by the Joint Organisations Data Initiative (JODI).