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Oil prices drop to 1-week lows as glut concerns linger

Published 03/24/2016, 04:52 AM
© Reuters.  Oil prices drop to 1-week lows
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Investing.com - Oil prices extended losses from the previous day in European trade on Thursday, with the U.S. benchmark slumping to a one-week low after data showed that domestic oil supplies rose to an all-time high last week.

Crude oil for May delivery on the New York Mercantile Exchange shed 49 cents, or 1.23%, to trade at $39.30 a barrel by 08:50GMT, or 4:50AM ET, after hitting a daily low of $39.17, the weakest level since March 16.

A day earlier, Nymex prices plunged $1.66, or 4.0%, in the wake of disappointing supply data.

The U.S. Energy Information Administration said in its weekly report that crude oil inventories rose by a more-than-expected 9.4 million barrels last week to an all-time high of 532.5 million barrels, underlining concerns over a domestic supply glut.

Since falling to 13-year lows at $26.05 on February 11, U.S. crude futures have rebounded by approximately 45% as a decline in U.S. shale production boosted sentiment. However, analysts warned that market conditions remained weak due to an ongoing glut.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for May delivery declined 31 cents, or 0.77%, to trade at one-week lows of $40.16 a barrel. On Wednesday, London-traded Brent futures tumbled $1.32, or 3.16%.

Producers from the Organization of the Petroleum Exporting Countries and non-members are due to meet on April 17 in Qatar discuss the output freeze. But it isn’t clear exactly which, or how many, OPEC and non-OPEC members will attend the meeting.

Brent futures are up by roughly 45%, since briefly dropping below $30 a barrel on February 11. Short-covering began in mid-February after Saudi Arabia and fellow OPEC members Qatar and Venezuela agreed with non-OPEC member Russia to freeze output at January levels, provided other oil exporters joined in.

Meanwhile, Brent's premium to the WTI crude contract stood at 86 cents a barrel, compared to a gap of 68 cents by close of trade on Wednesday.

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