LONDON – Oil slipped below $49 (32 pounds) a barrel on Wednesday after an industry report said U.S. crude stocks rose by the most on record last week, and as a firmer dollar added to pressure on prices.
The American Petroleum Institute said late on Tuesday U.S. crude stocks jumped by a massive 12.7 million barrels last week, triple the volume expected, and including a 2 million barrel increase at U.S. crude delivery point Cushing, Oklahoma.
If confirmed by official data from the U.S. Energy Information Administration at 3:30 p.m. on Wednesday, the weekly rise, excluding additions to the Strategic Petroleum Reserve, would be the biggest since records began in 1982, according to EIA data. It follows a 10.1 million barrel build last week.
“Crude oil stocks in the U.S. still appear to be growing incessantly,” Commerzbank analyst Carsten Fritsch said.
Brent crude oil for March delivery was down 68 cents at $48.92 a barrel by 3:05 p.m., having touched an intraday low of $48.79. It hit a near six-year low of $45.19 a barrel two weeks ago.
U.S. crude for March delivery fell $1.28 to $44.95 a barrel, and hit an intraday low of $44.92.
Fast growing U.S. shale output has pushed oil prices almost 60 percent lower since June, with losses accelerating after the Organisation of the Petroleum Exporting Countries said it would not cut output in a bid to preserve its market share.
Analysts at Goldman Sachs, widely seen as one of the most influential banks in commodity markets, said in a note published on Jan. 27 they expect U.S. crude, also known as WTI, to remain near $40 a barrel in the first half of this year.
“(That) should slow supply growth and balance the global oil market by 2016,” the Goldman analysts said.
“We then expect oil prices to move to the marginal cost of production,” which the bank pegged at $65 a barrel for WTI and $70 a barrel for Brent.
Brent has consolidated in a narrow range just below $50 in the past two weeks as traders assess whether further price falls would push too many small producers out of the market.
Crude futures settled up more than 2 percent on Tuesday, when the dollar index posted its biggest one-day fall since early October. But the dollar firmed on Wednesday and remains up by more than 15 percent in the last year.
A strong U.S. unit makes dollar-priced commodities more expensive for buyers holding other currencies, and has been an additional factor in oil’s near 60 percent collapse in the last seven months.
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