Oil traded at six year intraday lows in the US after weekly data by the government showed that US stockpiles rose again; marking a 10th straight week of record growth.
According to a weekly report by the Energy Information Administration, US crude inventories grew by 9.6 million barrels during the week ending March 13.
This brings the total oil stockpiles in the US to 458.5 million barrels- the highest ever recorded.
Analysts polled by Bloomberg expected stockpiles to grow by 4.4 million barrels with us output also rising to about 9.42 million barrels per day.
Light, sweet crude oil for April delivery slipped $1.21 or 2.8% most recently to $42.25 a barrel on the New York Mercantile Exchange. This is the lowest intraday price since March 2009.
Brent oil for May delivery, the global benchmark, inched down 36 cents to $53.26 a barrel on the London-based ICE exchange after closing the previous session 7 cents higher.
Concerns about the still rising oil glut coupled with tepid demand have weighed on oil prices in the country. There is increased concern among investors that important storage and delivery sites may soon run out of storage space.
“While we are not quite at crisis storage levels, a new record high of 458.5 million barrels of U.S [crude in] storage were reached — and Cushing’s storage rose to about 70% of its capacity,” John Macaluso, research analyst at Tyche Capital Advisors, told MarketWatch.
“Along with the continued supply glut, recent increases in production out of Libya and talks of an Iranian nuclear deal are all short-medium term bearish factors,” he said.
According to the EIA data, inventories in Cushing, Oklahoma, a key delivery and storage site for the benchmark Nymex contract, rose by 2.9 million barrels to 54.4 million barrels. The storage capacity of the site is estimated to be around 70 million barrels.
“Speculation is going to grow about operational capacity being hit in Cushing and what that portends for prices,” John Kilduff, founding partner of Again Capital in New York, told the Wall Street Journal. “I think we’re going to test $40 a barrel.”
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