Crude oil prices edged lower Thursday, as market sentiment remained cautious after data showed U.S. crude inventories made their largest gains in more than 30 years last week.
U.S. crude futures were recently down three cents, or 0.1%, at $45.31 a barrel on the New York Mercantile Exchange, reversing earlier gains and on track for the fifth consecutive day of losses. Brent crude, the global oil benchmark was up five cents or 0.1% at $46.91 a barrel.
On Wednesday, the U.S. Energy Information Administration said crude-oil stockpiles rose by a record 14.4 million barrels for the week ended Oct. 28. The report sent prices lower and highlighted concerns over excess supply in the global oil market.
Prices were still suffering from the inventory report on Thursday, said Andy Lebow, senior partner at Commodity Research Group. “A lot of the bullish undercurrents to this market have been removed to a certain extent. We’re still reeling from yesterday’s stock build,” Mr. Lebow said.
The main focus over recent months has been when oil demand will catch up with supply after a glut that has already gone on for two years, and whether the members of the Organization of the Petroleum Exporting Countries will reach consensus on a deal to cut output.
The latest EIA report was discouraging for supply and demand rebalancing.
Growth was mainly driven by strong imports—which averaged nine million barrels a day last week, two million barrels more than the week before, the EIA said. It added that over the past four weeks, crude-oil imports to the U.S. averaged 7.7 million barrels a day, an increase of 7% from a year earlier.
“With the seasonal refinery maintenance, it is easy to see how the backlog built up,” said Stuart Ive, a client manager at OM Financial. Other analysts also noted that many of the cargoes delivered to the U.S. last week were delayed shipments due to earlier inclement weather.
The prolonged decline in oil prices, spurred by overproduction, has dented profit margins of major oil and gas companies. Many of them have scaled back spending in the upstream sector. Even heavyweight oil producers, such as Saudi Arabia, are faced with national budget problems as revenue from exports dries up.
The price slide has also encouraged producers to pump as much oil as possible with output from producers including Russia at record levels.
To alleviate the overhang of supplies, OPEC members in September decided to curtail production by 200,000 to 700,000 barrels a day. The decision is expected to be ratified at the next OPEC meeting on Nov. 30, but discord among OPEC members on potential exemptions for some countries has raised doubts about whether a deal will come through.
“The main focus remains whether OPEC can do something, I think they will, I think they have to,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Gasoline futures were recently up 0.9% at $1.4612 a gallon, and diesel futures were recently down 0.2% at $1.4636 a gallon.
