Oil caps worst week since November as US supply glut expands

Bloomberg

Oil capped the biggest weekly loss since November after surging US supplies erased three months of gains that followed OPEC’s deal to cut output.
Futures tumbled 9.1 percent this week in New York. For a second day, they closed below the settlement on November 29, the day before OPEC agreed to the curbs. US crude stockpiles have expanded to a record for four straight weeks and output has climbed to the highest level in more than a year, government data showed Wednesday. Declines accelerated after a report showed US oil drilling rose for an eighth straight week.
Oil had fluctuated above $50 a barrel after the Organization of Petroleum Exporting Countries and 11 other countries started trimming supply for six months starting January 1. Saudi Arabia’s Oil Minister Khalid Al-Falih said this week global supplies are falling slower than expected, opening the door to extending the output-cut deal. Khalil was among the ministers and executives who gathered this week at the CERAWeek by IHS Markit conference in Houston.
“The market is still digesting this week’s high inventory number,” Mark Watkins, the Park City, Utah-based regional investment manager for the Private Client Group at US Bank, which oversees $136 billion in assets, said by telephone. “The shock number had the market test the $50 band and then break through. The next two weeks should be volatile, with prices potentially falling to the $45 level.”
West Texas Intermediate for April delivery fell 79 cents, or 1.6 percent, to $48.49 a barrel on the New York Mercantile Exchange. Total volume traded was 29 percent above the 100-day average.

US STOCKPILES
Brent for May settlement declined 82 cents, or 1.6 percent, to $51.37 a barrel on the London-based ICE Futures Europe exchange. It was also the lowest close since late November. The global benchmark crude declined 8.1 percent this week. Brent ended the session at a $2.34 premium to May WTI.
Energy companies were among the worst performers on the Standard & Poor’s 500 Index. The S&P Oil & Gas Exploration and Production Select Industry index fell as much as 1.2 percent.
US crude stockpiles inventories rose by 8.2 million barrels last week to 528.4 million, the highest level in weekly data compiled by the Energy Information Administration since 1982.
Output advanced for a third week to 9.09 million barrels a day, the most since February 2016, the EIA reported Wednesday. US oil rig count rose by eight to 617 this week, the highest since September 2015, according to Baker Hughes Inc. data.