Crude traded near $50 a barrel (bbl) in New York before U.S. government data on inventory levels in the world’s biggest oil consumer.
West Texas Intermediate (WTI), the U.S. benchmark, climbed as much as 1.8%. Crude stockpiles probably expanded by 3.95 million bbl (MMbbl) last week, extending a record high, according to a Bloomberg News survey before an Energy Information Administration (EIA) report Wednesday. WTI narrowed its discount against Brent on Monday by the most in two years on speculation that the accumulation of crude inventories at the U.S. storage hub in Cushing, Okla., will slow.
“U.S. crude inventories have built at a fervent pace so far this year,” Amrita Sen, chief oil analyst at London-based consultants Energy Aspects Ltd., said in a report. “The pace of Cushing builds may start to ease in the coming weeks,” causing WTI to strengthen in relation to Brent.
U.S. crude inventories climbed to 434.1 MMbbl over the seven weeks to Feb. 20, the most in data compiled by the EIA starting August 1982. Supplies probably increased to 438 MMbbl through Feb. 27, the median estimate of six analysts surveyed by Bloomberg showed.
The U.S. pumped 9.29 MMbbl/d through Feb. 20, the highest level in weekly data from the Energy Department’s statistical arm since January 1983. The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked shale formations from Texas to North Dakota.
Floating Storage
The discount of front-month oil futures to contracts for later settlement, known as contango, isn’t wide enough for traders to profit from storing oil at sea on tankers, according to Glencore Plc, a commodities trader and producer based in Baar, Switzerland.
“There were lots of reports of floating storage a few weeks ago,” Alex Beard, global head of oil at Glencore, said on a conference call. “Some of those vessels have been dropped. Some of them are being used in the normal market.”
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