Oil prices edged lower on Wednesday ahead of data that will shed light on U.S. crude inventories after an industry report indicated a surprise build in fuel stocks, underscoring the persistence of global oversupply.
Brent crude (LCOc1), the international benchmark for oil prices, was down 50 cents to $51.60 (40.26 pounds) per barrel at 1350 GMT. Brent is now around 8.5 percent below its April peak.
U.S. West Texas Intermediate (WTI) (CLc1) was down 40 cents at $49.16 per barrel, heading for its eighth fall in nine sessions.
U.S. inventory data issued late on Tuesday by the American Petroleum Institute (API) weighed on prices and showed the difficulty OPEC and non-OPEC producers are having in eliminating a supply glut despite output cuts they have made since January.
The report showed crude stockpiles rose 897,000 barrels in the week to April 21, defying expectations of a fall of 1.7 million barrels, and also showed a large build in gasoline stocks, unusual for this time of the year.
The U.S. Energy Information Administration (EIA) will issue its inventory data at 1430 GMT on Wednesday. [EIA/S]
“Should these figures be mirrored by the EIA, widespread concerns over stubbornly high OECD oil stocks will have been justified in what would be a setback to the global oil rebalancing process,” analysts at PVM said.
Brent and WTI found some support from Saudi Energy Minister Khalid al-Falih, who said he was interested in talks between the Organization of the Petroleum Exporting Countries and non-OPEC producers to stabilise prices.
OPEC and a handful of big producers, including Russia, pledged to cut output by 1.8 million barrels per day (bpd) in the first half of 2017. Gulf and some other producers have indicated cuts could be extended to the end of 2017.
An extension will be discussed when OPEC meets in May.
“The market remains heavy with doubts about OPEC’s ability to achieve a successful extension of the current deal with Russia adopting a lukewarm ‘wait and see’ approach,” said Ole Hansen, head of commodity strategy at Saxo Bank.
He said a bearish EIA report could prompt prices to challenge support levels but they were unlikely to break below the low in March, when Brent dipped under $50.
The average value of the Brent crude forward curve <0#LCO:> has fallen by over $5 per barrel since the start of the year, when the OPEC-led supply cut started.
The slump in Brent is a result of record crude oil volumes in circulation on ships around the world. Thomson Reuters Eikon shipping data showed 50 million barrels per day were booked for shipment on tankers this month, up 10 percent since December.
