Oil heads for longest slide in a month as fears of glut increase

LONDON (Bloomberg) -- Oil headed for its longest losing streak in almost a month on signs a global glut may persist.

Futures in New York fell as much as 1.3% after dropping about 1% over the previous two sessions. An industry report was said to show a 5.32 MMbbl gain in U.S. crude inventories last week, far higher than the median estimate in a Bloomberg survey before government data later Wednesday. European stockpiles rose the most in five months last week.

Before this week, oil had recovered from February’s losses after U.S. President Donald Trump named hawkish officials to his government, signaling the nation may pursue a more hard line approach toward OPEC member Iran. Still, fears remain that surging American shale production could thwart efforts by OPEC to reduce a global oversupply, and investors are keeping a close eye on U.S. crude stockpiles.

Inventory data is driving prices, said Tamas Varga, an analyst at PVM Oil Associates in London. “Refinery maintenance is in full swing,” causing “big builds in crude-oil stocks and big draws in products,” he said.

WTI crude for May delivery fell as much as $0.87 -- the third straight day of declines -- to $64.38/bbl on the New York Mercantile Exchange, and traded at $64.59 in London. The contract dropped $0.30 on Tuesday. Total volume traded Wednesday was about 10% below the 100-day average.

Brent for May settlement dropped $0.47 to $69.64/bbl on the London-based ICE Futures Europe exchange. The global benchmark traded at a $5.06 premium to WTI.

In the U.S., the crude-inventory figure from the API far outstrips the 850,000-bbl increase forecast in Bloomberg’s survey. The API also said stockpiles at the storage hub of Cushing, Oklahoma, increased by 1.66 MMbbl last week. That compares with a Bloomberg forecast for a 1 MMbbl gain.

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OPEC is looking for long-term cooperation with non-OPEC partners, Secretary-General Mohammad Barkindo said in Baghdad. Louisiana Offshore Oil Port, known as LOOP, confirmed it completed its second supertanker loading operation at its deepwater facility this month. Yuan-denominated oil futures on the Shanghai International Energy Exchange fell on their third trading day.