Oil price heading for longest losing streak in four months

An attendant filling a customer's car at a PetroChina station in Beijing.
An attendant filling a customer's car at a PetroChina station in Beijing.PHOTO: REUTERS

TOKYO (Bloomberg) - Oil fell a fifth day, heading for the longest run of declines since February, as United States industry data showed crude stockpiles expanded, exacerbating an oversupply.

Futures fell as much as 1.6 per cent in New York after settling at the lowest since May 23 on Tuesday (June 14). Inventories increased 1.16 million barrels last week, the American Petroleum Institute was said to report. Nigerian militants, whose attacks on oil infrastructure have sent the country's output plunging to its lowest level in 27 years, said for the first time they are considering peace talks.

Oil's 80 per cent rally from a 12-year low in February is faltering on speculation that higher prices will encourage more output and swell stockpiles. US producers boosted the number of drilling rigs for a second week and active machines in Canada rose to the highest since March, data from Baker Hughes Inc. and the Canada Association of Oilwell Drilling Contractors showed.

"We did see a further increase in US crude oil inventories," Mr Angus Nicholson, a markets analyst in Melbourne at IG Ltd., said by phone. "Oil at US$50 (S$67.80) or above is bringing US shale producers back to the market. They are quite happy with those price levels and are keen to start putting new drill rigs to use and maybe expanding output again."

West Texas Intermediate for July delivery fell as much 77 US cents to US$47.72 a barrel on the New York Mercantile Exchange and was at US$47.84 at 9.17am Tokyo time. 

Total volume traded was 17 per cent below the 100-day average. The contract slipped 39 US cents to settle at US$48.49 on Tuesday.