Oil prices are slipping again amid fresh concerns of a global oversupply. Brent crude, the international benchmark, dipped 5 percent, to below $59 a barrel, Thursday after reports of growing U.S. crude stockpiles and rising Saudi production, according to media outlets.
The price drop puts a stop to gains made in recent weeks. Brent had recovered by nearly 30 percent from a mid-January low of $45.19 a barrel, and on Tuesday traded at $61.12 a barrel. But the latest data on U.S. crude inventories and global output indicates that markets haven’t yet shed the supply glut that sent oil prices spiraling downward late last year.
U.S. crude stockpiles rose by 14.3 million barrels last week, according to data from the American Petroleum Institute (API), an industry group. Analysts had anticipated gains of only 3.2 million barrels for the crude stored by refiners, traders and other businesses.
If the U.S. Energy Information Administration confirms the data Thursday, the jump in inventory would be the biggest weekly addition in barrels since data became available in 1982. “The API figures gave the market a bit of a shock with their data indicating what would be the biggest-ever week-on-week U.S. crude stockbuild,” JBC Energy analysts said in a report cited by the Wall Street Journal.
"The inventories were the trigger for the sharp correction lower," Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt, told Reuters. "The focus is again back on the oversupply -- the big question is for how long?"
At the same time, production from Saudi Arabia, the world’s biggest exporter, could be increasing to nearly 10 million barrels per day, the PIRA consulting group said, Reuters noted. Analysts initially believed the country might decrease its production to raise prices, thereby boosting government revenue, but the Wednesday estimate suggests the OPEC leader will continue to protect its market share.