Oil slips from three-month high amid rising U.S. stockpiles

Oil slipped from a three-month high as investors weighed OPEC’s production cuts against estimates of rising crude inventories in the U.S.

Futures fell by 0.7 per cent in New York, after gaining around seven per cent since Feb. 11. U.S. crude stockpiles probably increased for a fifth week, rising by 3.1 million bbls, according to a Bloomberg survey before government data on Thursday. Citigroup Inc. boosted its Brent price forecast for this year as output cuts by Saudi Arabia and other OPEC nations shrink global supplies.

Facing a surge in U.S. shale flows, the Organization of Petroleum Exporting Countries and its allies started a fresh round of supply curbs last month that has helped push oil around 23 per cent higher this year. Yet the rally has been capped by fears that the U.S.-China trade war will exacerbate a global economic slowdown.

West Texas Intermediate for March delivery, which expires Wednesday, slipped 38 cents to US$55.71/bbl on the New York Mercantile Exchange at 1:15 p.m. in London. It gained 0.9 per cent on Tuesday to close at the highest level since Nov. 19. The more active April contract fell 39 cents to $56.06.

Brent for April settlement dropped 52 cents to US$65.93/bbl on the London-based ICE Futures Europe exchange. The contract lost 5 cents to settle at $66.45 on Tuesday, snapping a five-day rally. The global benchmark crude was at a $9.87 premium over WTI for the same month.

The Saudis went beyond pledged output reductions in January, but only 10 of 21 nations in the OPEC+ coalition fully complied with the agreed cuts that are aimed at shrinking a global glut, according to Bloomberg estimates.

U.S.-China negotiations resumed Tuesday ahead of a March 1 deadline for higher American tariffs on the Asian country’s goods. The U.S. is asking China to keep the yuan stable as part of the trade negotiations, a move aimed at neutralizing any effort by Beijing to devalue its currency to counter American tariffs, according to people familiar with the talks.

© 2019 Bloomberg L.P.