Oil slid further into a bear market as rising global supply is countering efforts by Opec and its allies to drain a glut.
Futures fell as much as 1.1 percent in New York after front-month prices closed Tuesday more than 20 percent below their February peak. Libya, exempt from the Opec-led output cuts, is pumping the most in four years while oil stored on tankers reached a 2017 high this month. US crude inventories dropped by 2.72 million barrels last week, the American Petroleum Institute was said to report.
Oil has returned to levels before the Organization of Petroleum Exporting Countries and allies including Russia decided in November to cut production to drain a global glut. Relentless supply gains in the US and renewed output from Libya are putting those efforts to boost prices in jeopardy. American drillers have added rigs to fields for 22 weeks, the longest run in 30 years, according to Baker Hughes Inc.
“There is no bullish catalyst for oil to be seen at the moment and thus it is drifting lower,” said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo. “It will be hard for Saudi and Russia to keep cutting production in the face of a strong rise in US crude production and output in Libya.”
West Texas Intermediate for August delivery was at $43.17 a barrel on the New York Mercantile Exchange, down 34 cents, at 8:40 a.m. in London. Total volume traded was about 3 percent above the 100-day average. The July contract expired Tuesday after dropping 97 cents, or 2.2 percent, to $43.23, the lowest close since Sept. 16.
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Brent for August settlement traded at $45.63 a barrel, down 39 cents, on the London-based ICE Futures Europe exchange. The contract lost 89 cents, or 1.9 percent, to $46.02 on Tuesday. The global benchmark crude traded at a premium of $2.43 to WTI.
Government data due Wednesday is forecast to show a US crude stockpiles dropped by 1.2 million barrels, according to estimates compiled by Bloomberg. Gasoline inventories rose 346,000 barrels and distillate stocks increased 1.84 million barrels last week, according to people familiar with API data.
Meanwhile, Saudi Arabia’s Deputy Crown Prince Mohammed Bin Salman replaced his cousin as heir to the throne, a shock announcement that consolidates the 31-year-old leader’s power in the world’s biggest oil exporter. He is expected to continue the kingdom’s current oil policies.
Mexico is expected to increase gasoline imports from the US with Pemex’s biggest refinery out of service for at least two weeks. Oil companies risk wasting $2.3 trillion of investments should demand peak in the next decade as the world works toward its goal of limiting global warming, according to a report from Carbon Tracker.
