Crude-oil futures dropped in Asian trade Thursday, reversing the previous day’s gains, as oil markets went back to fretting over rising U.S. supplies that hit new records.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at $43.49 a barrel, down $1.20, or 2.7% in the Globex electronic session. May Brentcrude on London’s ICE Futures exchange fell $0.57, or 1%, to $55.34 a barrel.
Oil prices had risen in the last trading session, with Nymex West Texas Intermediate crude snapping a six-session losing streak after the U.S. Federal Reserve said it was in no hurry to raise interest rates.
But the oil glut in the U.S. is weighing on prices again.
Overall, U.S. oil stockpiles rose more than expected, by 9.6 million barrels to 458.5 million barrels last week, the U.S. Energy Information Administration said. At the oil storage hub of Cushing, Oklahoma it rose by 2.9 million barrels, nearing full capacity though not quite there yet.
However, analysts at French bank Societe Generale said the rate of increasing oil stocks at Cushing and for the U.S. overall should start to ease in April and May.
"For the U.S. as a whole, crude storage capacity is only 63% full, with 192 million barrels of space remaining,” SocGen says, adding that there is more storage space remaining in caverns and tanks than was previously thought.
Societe Generale has revised its oil price forecasts, and expects ICE Brent crude to average $1.33 higher at $51.33 a barrel in the second quarter, and Nymex WTI crude to average $2 lower at $45 a barrel.
Debt in the oil sector: Meanwhile, the Switzerland-based Bank for International Settlements said in its quarterly review that one key reason for the sharp drop in oil prices has been the high amounts of debt piling up in the oil sector.
"The total debt of the oil and gas sector globally stands at roughly $2.5 trillion, two and a half times what it was at the end of 2006,” the bank said, adding that debt levels of energy firms rose faster than in other sectors.
As a result, oil companies were forced to increase or maintain high oil production even when prices fell to stay liquid. They also had to increase hedging in derivatives markets against further oil price drops, BIS said.
Nymex reformulated gasoline blendstock for April—the benchmark gasoline contract—fell a penny to $1.7860 a gallon.
(MarketWatch)
