NEW YORK: US oil stocks reached a new three-decade high and pressed crude prices lower yesterday, as US oil production continued to surge while domestic demand remained anemic.
US commercial stocks stood at 395.3 million barrels for the week ended April 26, the highest weekly inventory figure since the US Energy Information Administration began collecting the data in 1982.
The build comes as US crude production has taken off on the rise in exploitation of shale oil and gas deposits. It’s just indicative of these shale plays ramping up,” said Matt Smith, an analyst at Schneider Electric, an energy management firm. “It tells us we’re in the middle of an oil boom.”
Oil production over the four-week period ending April 26 was 7.3 million barrels a day, up 19.4 percent from a year ago. During the same period, US domestic consumption slipped 2.7 percent to 18.3 million barrels, data show.
This week’s rise in oil stocks of 6.7 million barrels came in well above the 800,000 barrels forecast by analysts, according to a survey by Dow Jones Newswires. That sent the New York oil price tumbling further after an early fall ahead of the data release.
Oil pared losses after losing more than $3 a barrel but remained lower and below $100 a barrel. Brent crude futures were down $2.62 to $99.75 a barrel by 1537 GMT, and dipped below $99 for the first time since April 23.
US oil was down $2.64 at $90.82 a barrel. It earlier reached a low of $90.11, falling through its 50-day, 100-day, and 200-day moving average, key technical indicators watched by traders.
“We got down to support near $90, then we saw a little short covering ahead of the Fed report coming out,” said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut. The contract slid 7 percent in April, its biggest monthly drop in 11 months, on the back of indicators suggesting the global economy remains in a fragile state.
Fundamentals also appeared bearish. Supply from the Organisation of the Petroleum Exporting Countries is predicted to average 30.46 million barrels per day (b/d)in April, up from 30.18m b/d in March, a Reuters survey showed.
The Buzzard oilfield in the North Sea, an important contributor to the Brent crude benchmark, was on schedule to restart soon, trade sources said, after a steam release caused the field to be shut down on Monday.