Oil fell for a fifth consecutive day June 14, heading for the longest run of declines since February, as U.S. industry data showed crude stockpiles expanded, exacerbating an oversupply.
Futures fell as much as 1.9% in New York after dropping 5.4% the previous four sessions. Inventories rose 1.16 million barrels last week, the American Petroleum Institute was said to report. Nigerian militants, whose attacks on oil infrastructure have cut the country’s output to its lowest level in 27 years, said they are considering peace talks for the first time.
Oil’s 80% rally from a 12-year low in February is faltering on speculation that higher prices will encourage more output and swell stockpiles. U.S. producers boosted the number of drilling rigs for a second week and active machines in Canada rose to the highest level since March, data from Baker Hughes Inc. and the Canada Association of Oilwell Drilling Contractors showed.
“The recent recovery in prices creates risk that non-OPEC production declines less than we expect,” analysts at Goldman Sachs Group Inc. including Damien Courvalin said in a report. “We continue to view the recovery in prices and fundamentals as fragile.”
West Texas Intermediate for July delivery fell as much 94 cents to $47.55 a barrel on the New York Mercantile Exchange and was at $48.12 at 9:46 a.m. London time. The contract slipped 39 cents to settle at $48.49 on June 14. Total volume traded was 3% above the 100-day average.
Brent for August settlement declined as much as 92 cents, or 1.9%, to $48.91 a barrel on the London-based ICE Futures Europe exchange. Prices fell 52 cents to $49.83 a barrel on June 14. The global benchmark crude traded at a 71-cent premium to WTI for August delivery.
Stockpiles declined by about 2.33 million barrels last week, according to the median estimate in a Bloomberg survey before a report from the Energy Information Administration on June 15. In the week ended June 3, nationwide inventories were at 532.5 million, according to the EIA.
Nigerian State Minister for Petroleum Resources Emmanuel Kachikwu said June 13 that negotiations with the Niger Delta Avengers had begun. After rejecting talks with the government last week, the militants said they would need “a genuine attitude and conducive atmosphere” in order to “commit to any proposed dialogue.”
• Completion of drilled but uncompleted wells in the U.S. will accelerate at a WTI price of $50 a barrel, while $60 oil will trigger an increase in the rig count, according to a report from Citigroup Inc.
• The global market will be almost balanced next year as demand continues to rise faster than output, while the current glut is much smaller than previously thought, the International Energy Agency said.
• Venezuela and the U.S. will begin talks to normalize relations as President Nicolas Maduro said he’s ready to exchange ambassadors.