Oil extends slide below US$50 as US supplies seen worsening glut

An oil pump is viewed in Odessa, Texas on Feb 4, 2015. Oil extended its slide below US$50 a barrel before U.S. government data forecast to show crude inventories expanded from a record high in the world's biggest consumer. -- PHOTO: AFP
An oil pump is viewed in Odessa, Texas on Feb 4, 2015. Oil extended its slide below US$50 a barrel before U.S. government data forecast to show crude inventories expanded from a record high in the world's biggest consumer. -- PHOTO: AFP

MELBOURNE (Bloomberg) - Oil extended its slide below US$50 a barrel before U.S. government data forecast to show crude inventories expanded from a record high in the world's biggest consumer.

Futures fell as much as 0.7 per cent in New York for a fifth day of declines, the longest losing streak since August.

Crude stockpiles probably rose by 3.75 million barrels last week, a Bloomberg News survey showed before an Energy Information Administration report on Wednesday. Supplies have increased the prior six weeks to 425.6 million, the most in records dating back to August 1982. OPEC, which pumps about 40 per cent of the world's oil, has no plans for an emergency meeting, according to a group delegate.

Oil slumped almost 50 per cent last year as the Organization of Petroleum Exporting Countries signaled that it's prepared to let prices drop to a level that would force U.S. production to slow. Rigs targeting crude in the nation shrank to the fewest since July 2011 after drillers idled machines for an 11th week.

"Traders are wrestling with two key dynamics at the moment - the fact that supply is exceeding demand and that's evidenced by growing U.S. inventories against a presumption by some that supplies are going to moderate," said Ric Spooner, a chief strategist at CMC Markets in Sydney.

West Texas Intermediate for April delivery dropped as much as 34 cents to US$49.11 a barrel in electronic trading on the New York Mercantile Exchange and was at US$49.15 at 1:22 p.m. Singapore time. The contract lost US$1.36 to US$49.45 on Monday. The volume of all futures traded was about 55 per cent below the 100-day average. Futures have fallen 7.7 per cent this year.

U.S. Supplies Brent for April settlement was 4 cents lower at US$58.86 a barrel on the London-based ICE Futures Europe exchange. It fell US$1.32 to US$58.90 on Monday, the lowest close since Feb. 12. The European benchmark crude traded at a premium of US$9.70 to WTI.

U.S. crude stockpiles have climbed almost 20 per cent above the five-year average level for this time of the year, according to the EIA. Production surged to 9.28 million barrels a day through Feb. 13, the most in weekly data compiled by the Energy Department's statistical arm since January 1983.

OPEC has had no concrete discussions about holding emergency discussions, the delegate said on Monday, asking not to be identified because the talks are private. The 12-member group last gathered Nov. 27 in Vienna and is scheduled to meet on June 5.

OPEC pumped 30.9 million a day of oil in January, exceeding its target of 30 million for an eighth straight month, according to production estimates compiled by Bloomberg.