Oil eased yesterday after a rise in US crude inventory added to signs demand may be slowing in spite of ongoing output cuts by producer group OPEC and imminent US sanctions against Iran. Brent crude futures were last down 65 cents at $77,78 a barrel by 1147 GMT, while US crude futures fell 32 cents to $70,99 a barrel, leaving the spread between the two just shy of a 2015 high of $7 a barrel. Physical crude markets are sagging under the weight of unsold barrels of oil, while the 50-percent rise in the oil price in the last year is encouraging major companies such as ExxonMobil, Royal Dutch Shell, Chevron, BP and Total to increase output.
“Aggregate production — both actual and projected — is growing for the majors,” S&P Global Ratings said in a report published on Tuesday.
Spot crude oil cargo prices are at their steepest discounts to futures prices in years as sellers are struggling to find buyers for West African, Russian and Kazakh cargoes, while pipeline bottlenecks trap supply in west Texas and Canada.
The bottleneck in North America likely contributed to a 4,9 million barrel rise in US crude oil inventories, to 435,6 million barrels, that the private American Petroleum Institute reported on Tuesday.
“The API inventory data in the US fits with . . . a topping pattern — or at least a decent pause — for oil prices at the moment,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Official US government fuel storage data is due for release by the Energy Information Administration (EIA) later on Wednesday.