Brent crude oil prices slipped below $59 a barrel on Thursday after another big weekly build in U.S. crude inventories and a possible rise in Saudi output stoked worries about oversupply.
U.S. crude stocks rose by 14.3 million barrels last week, data from industry group the American Petroleum Institute (API) showed after Wednesday’s settlement, compared with analysts’ expectations for an increase of 3.2 million barrels.
If U.S. Energy Information Administration (EIA) data due at 1600 GMT confirms the large build, it would be the biggest weekly addition in barrels since such data became available in 1982.
The API and EIA reports are a day late this week because of a U.S. holiday on Monday.
At 1112 GMT, benchmark Brent crude futures for April were down $1.52 at $59.01 a barrel, after touching an intraday low of $58.46 earlier in the session, extending declines from Tuesday’s two-month high of $63.
U.S. crude for March delivery, which expires on Friday, was down $2.10 at $50.04 a barrel after dipping as low as $49.73.
Trading was quiet in Asian hours as markets in China and other nations were closed for the Lunar New Year holidays.
“The inventories were the trigger for the sharp correction lower,” Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt, said. “The focus is again back on the oversupply – the big question is for how long?”
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.
“A big build of seven to nine million barrels would be enough to push prices lower,” Fritsch said, looking ahead to the EIA data. “But tomorrow we could see a recovery in expectation of another sharp drop in the rig count.”
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.