Oil price falls sharply amid expectations of record buildup in US inventories

Crude oil futures have extended sharp declines into a second straight session so far in today’s trading, amid expectations of record increases in US oil inventories. Crude prices fell under additional downward pressure amid speculation over a possible increase in Saudi output, further boosting oversupply concerns.

Brent for April delivery had shed over a dollar of its value, or 1.7 percent, to $59.50 per barrel as of 07:01 GMT on the London-based ICE Futures Europe exchange. Yesterday, the contract tumbled 3.2 percent to close at $60.29. A day earlier, it closed at its highest in about two months.
Crude futures slipped after consultancy energy group PIRA said yesterday that production from the world’s largest exporter Saudi Arabia may be increasing to near 10 million barrels per day, Reuters has reported. Prices have continued their fall today amid quiet trading during the Asian session as markets in China, Singapore and some other countries are closed for the Lunar New Year holidays.

March WTI futures, which expire at the end of the week, had plummeted nearly three percent, or $1.55, to $50.59 a barrel in electronic trading on the NYMEX in New York as of 07:01 GMT. The contract dropped 2.6 percent yesterday.
Bullish sentiment on oil markets took a hit following the end of yesterday’s US session after the release of supply data from the American Petroleum Institute (API) trade body. According to the report from the API, US crude supplies for the seven days to 13 February surged 14.3 million barrels from a week earlier. Analysts polled by Platts forecast an increase of 3.1 million barrels for the week.

Market participants will be eyeing today’s release from the US Energy Information Administration (EIA), due at 16:00 GMT. Should the EIA report confirm the buildup, it would be the largest weekly increase in crude inventories since EIA data became available in 1982.
Last week, US oil stockpiles rose to a record high of 417.9 million barrels. Supply data are delayed by a day this week due to Monday’s Presidents Day holiday.
Based on the two front month contracts, Brent was trading at a premium of $8.91 to WTI as of 07:01 GMT. US crude prices have recently been trading at their biggest discount to Brent since August last year.