Oil
slips toward $60 as oversupply weighs
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[February 20, 2015]
By Jack Stubbs
LONDON (Reuters) - Brent crude oil fell
toward $60 a barrel on Friday as oversupply, underlined by record-high
U.S. crude stocks, weighed on the market.
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U.S. crude inventories rose 7.7 million barrels to 425.6 million
barrels last week, rising for a sixth straight week to record highs,
data from the Energy Information Administration (EIA) showed on
Thursday. <EIA/S>
Stockpiles of West Texas Intermediate (WTI) U.S. crude at the
Cushing oil hub in Oklahoma rose the most in six years, the EIA
said.
"With total crude stocks now about 425 million barrels and Cushing
north of 46 million barrels, WTI is looking increasingly mispriced
high above $52 per the April contract," said Jeffries Futures
analysts in a note to traders.
Brent crude futures <LCOc1> for April were down 15 cents at $60.06
by 1135 GMT (06:35 a.m. EST), having hit an intraweek low of $57.80
in the previous session.
U.S. crude for March delivery <CLc1> was down 21 cents at $50.95.
The contract expires on Friday.
![](http://archives.lincolndailynews.com/2015/Feb/20/images/ads/current/ldn_sda_062409.png) Trading was quiet in Asian hours as China and other countries were
closed for the Lunar New Year holiday.
While swelling U.S. crude inventories tend to soften prices, falling
U.S. rig numbers support oil as they signal supply reduction.
The number of rigs drilling for oil in the United States fell to its
lowest since August 2011 last week. This week's rig-count numbers,
produced by oil services firm Baker Hughes Inc, are due around 1800
GMT (01:00 p.m. EST) on Friday.
"I assume we're going to continue to see another big fall [in rig
numbers] and that's going to provide support for the market," said
Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.
But Jeffries Futures analysts said a rise in oil prices on falling
rig numbers would be premature.
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"Although the market could receive another pre-weekend boost from a
plunge in rig counts, we will reiterate a substantial lag time of
months before the rig numbers begin to force a leveling in output,"
they said.
Expectations of continued oversupply were supported by rising
production levels from top oil exporter Saudi Arabia.
Barclays oil analyst Miswin Mahesh said exports from Saudi Arabia
could reach 9 million barrels per day next year as it focuses on
protecting market share.
"It is uniquely positioned relative to other oil producers in a
highly competitive market," he said.
(Additional reporting by Osamu Tsukimori in Tokyo; editing by Jason
Neely)
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