Oil dropped for a third day as U.S. industry data showed crude stockpiles expanded and as OPEC ministers arrive in Vienna to decide on prolonging supply cuts past the end of March.
Futures lost as much as 0.9 percent in New York after falling 1.6 percent the previous two sessions. U.S. crude inventories rose by 1.82 million barrels last week, the American Petroleum Institute was said to report, even as it noted a large decline at the storage hub in Cushing, Oklahoma. While all OPEC members support extending output curbs until the end of 2018, Russia hasn’t yet committed to the proposal, said people familiar with the matter.
Oil has eased this week from the highest level in more than two years on uncertainty about the outcome of Thursday’s meeting of the Organization of Petroleum Exporting Countries. While the global glut relative to the five-year average has more than halved since January, the surplus still stands at 140 million barrels, OPEC Secretary-General Mohammad Barkindo said Monday.
“The overall small build, when you consider the big draw that we had in Cushing, is on the bearish side for crude oil,” said Olivier Jakob, managing director of Petromatrix GmbH, in reference to the API report. “After that it’s really about OPEC tomorrow. Reading the small print in the communique is going to be important.”
West Texas Intermediate for January delivery was at $57.52 a barrel on the New York Mercantile Exchange, down 47 cents, at 10:33 a.m. in London after falling 12 cents on Tuesday. Total volume traded was about 31 percent below the 100-day average. WTI has averaged about $54 this quarter, the highest since the second quarter of 2015.
Brent for January settlement, which expires Thursday, lost 62 cents, or 1 percent, to $62.99 a barrel on the London-based ICE Futures Europe exchange after dropping 0.4 percent Tuesday. The global benchmark traded at a premium of $5.47 to WTI. The more-active February contract fell 65 cents to $62.59.
U.S. crude stockpiles at Cushing, the delivery point for WTI and the biggest U.S. oil-storage hub, fell by 3.18 million barrels last week, the API said, according to people familiar with the data. Nationwide inventories are forecast to have dropped by 2.95 million barrels, according to a Bloomberg survey before an Energy Information Administration report due Wednesday.
While Russia and OPEC have crafted the outline of a deal to continue their curbs for nine months, Moscow still has concerns that supporting prices above $60 a barrel will help U.S. shale rivals, people familiar said. Many producers agree that oil-production cuts should be extended to the end of next year to stabilize the market, Oman Oil Minister Mohammed Al Rumhy said in Vienna. Oil explorers took advantage of a market rally to lock in prices for almost 1 million barrels a day’s worth of future output, signaling the shale boom’s staying power as OPEC ponders extending supply curbs.