MW: Oil prices under pressure after historical high for U.S. crude stocks
Oil prices fell further Thursday, depressed by the latest pick up in U.S. crude stockpiles and production.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April CLJ7, -0.80% traded at $53.54 a barrel, down 29 cents, or 0.5%, in the Globex electronic session. May Brent crude LCOK7, -0.80% on London‚Äôs ICE Futures exchange fell 27 cents, or 0.5%, to $56.09 a barrel.
U.S. crude inventories rose to a historical high last week, increasing by 1.5 million barrels to 520.2 million barrels, according to data by the U.S. Energy Information Administration. The build was largely driven by significant imports from Saudi Arabia, Iraq, and Canada, as well as strong domestic production which rose above 9 million barrels for the second straight week.
The burgeoning U.S. crude output in recent months has largely offset the ongoing production cuts by the Organization of the Petroleum Exporting Countries and Russia. The two counterforces are keeping prices in a slim range, analysts say.
‚ÄúIf January 2017 was considered a fairly ‚Äėboring‚Äô month for crude oil prices, February was even worse!‚ÄĚ the Singapore Exchange said in a note, pointing out that Brent prices traded in one of the narrowest ranges in recent memory last month --between $54 to just over $57 a barrel.
ANZ Research pointed out that crude volatility has been at its lowest level since 2014, according to the Chicago Board Options Exchange.
Market observers expect the lull to persist for more weeks with the next major price mover likely to be OPEC‚Äôs meeting at the end of May in which members will deliberate whether to extend the cuts beyond the initial six-month period.
‚ÄúThe OPEC decision could be the first disappointment even though at the moment members are showing a 90% compliance rate to the production cut deal,‚ÄĚ said Vivek Dhar, a commodities strategist with Commonwealth Bank of Australia.
Oil prices were also pressured by the U.S. dollar rising on increasing odds of an interest rate rise by the Federal Reserve as early as later this month. Since oil business is conducted in dollars, a stronger greenback is typically a deterrent for buyers using other currencies.
The WSJ Dollar Index BUXX, +0.40% , a measure of the U.S. dollar against a basket of major currencies, was last up 0.09% at 91.58.
Nymex reformulated gasoline blendstock for April RBJ7, -1.24% ‚ÄĒ the benchmark gasoline contract ‚ÄĒ fell 120 points to $1.6660 a gallon, while April diesel traded at $1.6252, 11 points higher.
ICE gasoil for March changed hands at $493.25 a metric ton, down $3.50 from Wednesday‚Äôs settlement.