Oil prices fall below $59 on record-high U.S. stocks

BRENT crude oil prices fell below $59 a barrel yesterday after U.S. government data showed crude stocks hit a record high last week.

  U.S. commercial crude oil inventories rose by 7.7 million to a record 425.64 million barrels in the week ended February 13, said the U.S. Energy Information Administration (EIA).

  The inventory was the biggest weekly addition in barrels since records began in 1982, exceeding analysts’ expectations of a 3.2 million barrel rise. 

  Gasoline stocks rose by 485,000 barrels compared with analysts’ expectations in a Reuters poll for a 167,000 barrels gain. Distillate stockpiles fell by 3.8 million barrels, versus expectations for a 2.1 million barrels drop.

  Crude stocks at the Cushing, Oklahoma, delivery hub rose 3.66 million to 46.26 million barrels, the EIA data showed.

  Benchmark Brent crude futures for April were down $1.83 at $58.70 by 1618 GMT, having hit an intraday low of $57.80 earlier in the session, extending declines from Tuesday’s two-month high of $63.

  U.S. crude for March delivery was down $2.05 at $50.09 a barrel after falling as low as $49.15. The contract expires on Friday.

  The EIA data was a day late this week because of a U.S. holiday on Monday.

  “The report (is) basically bearish because you continue to add crude to storage, showing it will take some time for the drops in rig counts to have an impact on supply,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

  The market has tended to retreat after swelling U.S. crude inventories, but then rally after falling U.S. rig-count numbers, which come out every Friday.

   He added: “Tomorrow, we could see a recovery in expectation of another sharp drop in the rig count,” said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt.

  “The focus is again back on the oversupply — the big question is for how long?”

  At the same time, production from the world’s biggest exporter Saudi Arabia may be increasing to near 10 million barrels per day, consultancy PIRA said on Wednesday.

  The estimate suggests the country is cleaving to the strategy of protecting market share rather than cutting production to boost prices.