Oil drops back below $40 after fourth consecutive day of declines

An oilfield worker walks next to pipelines at PDVSA's Jose Antonio Anzoategui industrial complex in the state of Anzoategui, Venezuela. Reuters

Oil declined for a fourth day before weekly US government data forecast to show increasing crude stockpiles kept supplies at the highest level in more than eight decades.

Futures lost as much as 0.7 per cent in New York after slipping 0.2 per cent Monday. Inventories probably increased by 3 million barrels last week, a Bloomberg survey shows before an Energy Information Administration report on Wednesday. That would be a seventh weekly gain. Indonesia will attend a meeting of major oil exporters in Doha next month to consider an output freeze, according to Energy and Mineral Resources minister Sudirman Said.

“The size of the crude inventories combined with the fact we’ve seen a significant rally in prices is going to limit gains,””Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “Oil is in a short-term downtrend.”

Oil tumbled to a 12-year low this year before rebounding on speculation the global surplus will ease as US output declines. Saudi Arabia, Russia, Qatar and Venezuela agreed last month they would cap production at January levels if other producers followed suit to tackle a global oversupply.

West Texas Intermediate for May delivery fell as much as 29 cents to $39.10 a barrel on the New York Mercantile Exchange and was at $39.16 at 11.43am Hong Kong time. The contract lost 7 cents to close at $39.39 Monday. A fourth day of declines would be the longest run of losses since February 11. Total volume traded was about 56 per cent below the 100-day average.

Brent for May settlement slid as much as 29 cents, or 0.7 per cent, to $39.98 a barrel on the London-based ICE Futures Europe exchange. The contract fell 17 cents to $40.27 Monday, the lowest close since March 15. The global benchmark crude was at a premium of 87 cents to WTI.

US crude inventories increased to 532.5 million barrels through March 18, according to data from the EIA. Gasoline stockpiles probably dropped by 2.5 million barrels last week, according to the median estimate in the Bloomberg survey. That would be a sixth weekly decline.

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