Oil below $50 in Most Volatile Trade since 2009 as Supplies Gain
OIL TRADED below $50 a barrel amid the most volatility since April 2009 as US crude stockpiles climbed to the highest level in more than three decades.
Futures gained as much as 1.2 percent in New York, compared with a 8.7 percent drop on Wednesday, the biggest slide since November. Crude inventories expanded by 6.33 million barrels to 413.1 million last week, Energy Information Administration data show. The increase was almost double the median estimate in a Bloomberg News survey of analysts.
Rising US stockpiles are contributing to a global glut that drove prices almost 50 percent lower last year. Oil’s “new normal” is $60 to $70 a barrel in the next few years, according to Eurasia Group, a New York-based consultant. Supply will exceed demand by 2 million barrels a day in the first half of 2015, said Iranian Oil Minister Bijan Namdar Zanganeh.
“There’s still an overriding concern about supply,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “It’s all about finding a base and the volatility that we’ve seen shows it’s trying to do that. As soon as we get any feeling about weak economics, that’s going to hurt the price.”
West Texas Intermediate for March delivery rose as much as 58 cents to $49.03 a barrel in electronic trading on the New York Mercantile Exchange and was at $48.92 at 1:21 p.m. Sydney time. The contract fell $4.60 to $48.45 on Wednesday, halting the largest four-day rally since January 2009. The volume of all futures traded was about 52 percent below the 100-day average.
US Stockpiles
Brent for March settlement gained as much as 85 cents, or 1.6 percent, to $55.01 a barrel on the London-based ICE Futures Europe exchange. It decreased $3.75 to $54.16 on Wednesday. The European benchmark crude traded at a premium of $5.98 to WTI.
US crude inventories climbed to the highest level in weekly records compiled since August 1982 by the EIA, the Energy Department’s statistical arm. Supplies are 16 percent above the five-year seasonal average. Stockpiles at Cushing, Oklahoma, the nation’s biggest oil-storage hub and the delivery point for New York contracts, increased for a ninth week to 41.4 million barrels, the highest level in a year.
Production declined by 36,000 barrels a day to 9.17 million a day in the week ended Jan. 30, the data showed. Output was 9.21 million a day in the prior period, the most in weekly estimates dating back to January 1983.
The United Steelworkers union, representing employees at more than 200 refineries, terminals, pipelines and chemical plants in the US, continued its work stoppage at nine sites that began on Feb. 1. It’s negotiating a labor contract with companies represented by Royal Dutch Shell Plc, according to a person familiar with the talks. — Bloomberg