Oil retreated from a five-month high as an increase in U.S. crude inventories overshadowed OPEC’s efforts to reduce production.
Futures fell as much as 1.3 percent in New York after government data showed that crude inventories jumped by 7.03 million barrels last week to the highest since 2017. The International Energy Agency said that, although global markets are tightening as OPEC output falls, it could lower demand forecasts because of economic threats.
Output cuts by the Organization of Petroleum Exporting Countries and its allies have propelled crude’s 40 percent surge this year, with supply disruptions from Libya to Venezuela adding impetus. But the gains have been capped by fears over the global economy, and signs that the price rally will unleash a new torrent of American shale oil.
“Lower imports and higher crude-oil processing were unable to prevent the pronounced inventory build because oil production remained record-high and exports dropped to their lowest level since the end of January,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.
West Texas Intermediate for May delivery fell as much as 85 cents to $63.76 a barrel on the New York Mercantile Exchange, and traded for $63.84 at 8:38 a.m. local time. It rose 63 cents to $64.61 on Wednesday, the highest closing level since Oct. 31.
Brent for June settlement declined 70 cents to $71.03 a barrel on the London-based ICE Futures Europe exchange, after closing Wednesday at the highest since Nov. 7. The global benchmark crude was at a premium of $7.14 to WTI for the same month.
U.S. crude stockpiles expanded by more than double the amount analysts had forecast to 456.6 million barrels, well above the five-year average, according to data from the Energy Information Administration. That suggests American output, which held at a record 12.2 million barrels a day last week, may still add to a global glut.
Striking a more bullish tone, the IEA said Thursday that worldwide crude inventories are set to decline for the rest of the year as OPEC output falls. Yet it also said the accumulation of economic risks from Europe to Argentina may ultimately lead the agency to reduce its forecasts for demand.
OPEC itself said on Wednesday that global inventories will decline sharply this quarter and next if output remains at current levels. The group’s production -- at 30.022 million barrels a day in March -- is about 758,000 barrels a day below the average amount it believes is needed during the second quarter.
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