Oil prices slide on swelling US stockpiles

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Oil prices slide on swelling US stockpiles
Flared natural gas is burned off at a natural gas plant in the Permian Basin in Garden City, Texas.

US crude inventories are rising faster than expected

By Edmund Blair

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Published: Wed 22 Mar 2017, 6:25 PM

Last updated: Wed 22 Mar 2017, 8:28 PM

Oil prices slipped back to three-month lows on Wednesday after data showed US crude inventories rising faster than expected.

Benchmark Brent crude was down 82 cents at $50.14 per barrel at 09.36 GMT, after dropping to $50.05, its lowest level since Opec announced on November 30 its plan for cuts. The deal with non-Opec states was reached in December. US light crude was down 70 cents at $47.54 a barrel, also slipping towards a three-month low.

On Tuesday, the American Petroleum Institute reported US inventories climbed by 4.5 million barrels to 533.6 million last week, a bigger rise than the 2.8 million analysts forecast.

Investors now want to see whether Wednesday's figures from the Energy Information Administration, a unit of the Department of Energy (DoE), confirm the rise.

"A look below $50 [for Brent] is quite possible today if DoE data show a similar pattern, but it's impossible to say how far below $50," Commerzbank's Fritsch said.

US shale oil producers have been adding rigs, pushing up the country's oil production to about 9.1 million bpd, from around 8.5 million bpd in late 2016.

"Opec's market intervention has not yet resulted in significant visible inventory drawdowns, and the financial markets have lost patience," US bank Jefferies said in a note.

The bank said Opec-led cuts would start having an impact in the second half of 2017, but added that US crude production was expected to grow by 360,000 bpd in 2017 and 1 million bpd in 2018.

US bank Goldman Sachs warned its clients in a note this week that a US shale-led production surge "could create a material oversupply in 2018-19". - Reuters

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