HONG KONG (Feb 19): Oil traded below $31 a barrel after U.S. crude stockpiles rose to the highest in more than eight decades as Saudi Arabia and Russia propose to freeze output amid a worldwide surplus.
Futures lost as much as 1.4 percent in New York, trimming the first weekly advance this month. Inventories expanded to 504 million barrels, the highest level in data going back to 1930, according to the Energy Information Administration. Iraq backs any decision to support prices and balance the market, Oil Minister Adel Abdul Mahdi said in a statement, without saying whether it would cap its own production.
Oil is still down 17 percent this year after the Organization of Petroleum Exporting Countries abandoned output targets in early December and as U.S. inventories swelled. Iran, OPEC’s second-biggest producer until sanctions were intensified in 2012, will delay the start date for sales of a new heavy grade to June to give buyers more time to test the crude in their refineries.
“Inventories continue to build,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “Not only is there downside risks to prices but there is also obvious limits to any upside potential. Iran has an argument that having been out for so long, they’ve got a right to production and some other producer needs to cut back.”
West Texas Intermediate for March delivery, which expires Monday, fell as much as 42 cents to $30.35 a barrel on the New York Mercantile Exchange and was at $30.56 at 9:38 a.m. Hong Kong time. Prices are up 3.8 percent this week. Total volume traded was about 45 percent below the 100-day average. The more- active April future was 26 cents lower at $32.67 a barrel.
Brent for April settlement declined as much as 54 cents, or 1.6 percent, to $33.74 a barrel on the London-based ICE Futures Europe exchange. Prices are 1.9 percent higher this week. The European benchmark crude traded at a premium of $1.30 to WTI for April.
Supplies at Cushing, Oklahoma, the biggest U.S. oil-storage hub, rose to a record 64.7 million barrels. The site, which is the delivery point for WTI, has a working capacity of 73 million, according to the EIA.