West Texas Intermediate oil futures slipped after a Data service reported that there was a large increase in supply in a key delivery and storage hub.
Genscape Inc reported to its clients Thursday that supply to key benchmark US oil futures contract delivery and storage point Cushing, Oklahoma rose to 2.2 million barrels between March 6 and March 10.
Citing two market participants, the Data service’s report fueled speculation that Cushing would reach maximum capacity. Market experts warn that this would cause oil prices to plummet owing to a slump in demand.
Adding to these concerns is increase in US oil production and less processing at refineries as they undergo seasonal maintenance. The Houston Oil Ship Channel also opened earlier Thursday allowing delivery of oil imports to refineries.
“The Cushing estimate shows more of the same old for U.S. crude – intense amounts of supply and shaky demand,” John Kilduff, partner at New York energy hedge fund Again Capital, told Reuters.
West Texas Intermediate for April delivery slipped 67 cents or 1.4% to $47.49 on the New York Mercantile exchange. This marked the first time the price had fallen below $48 since January 29.
Elsewhere Brent oil for April deliveries on the London-based ICE Futures Exchange rose 43 cents or 0.7% to $57.94 a barrel. This growth was attributed to the continued violence by ISIS in Iraq.
According to Bloomberg, Brent’s premium to WTI continued to increase hitting $10.41 a barrel on Thursday compared to the previous day’s $9.37. This is the highest it has been since Friday.
“Brent is being forced to price in some geopolitical risk premium as increasing military activity in the area of Iraqi and Libyan oil fields could still threaten supply availability,” said energy-advisory firm Ritterbusch & Associates in a note.
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