NEW YORK (Reuters) - Oil prices fell about 3 percent on Monday on concerns that a six-week market recovery has gone beyond fundamentals as U.S. crude stockpiles continue to build and Iran maintains little interest in joining major producers in freezing production.
Crude inventories across the United States likely hit record highs for a fifth straight week last week, rising 3.3 million barrels, a Reuters poll of analysts said. [EIA/S]
Stockpiles at the Cushing, Oklahoma grew almost 850,000 barrels to 69.6 million in the week to March 11, bringing storage at the delivery hub for U.S. crude futures to near capacity, traders said, citing market intelligence firm Genscape.
The Organization of the Petroleum Exporting Countries, meanwhile, said global demand for crude from its members, including Saudi Arabia and Iran, will be less than previously thought in 2016 due to competing non-OPEC supply. OPEC supply will likely exceed demand by about 760,000 barrels per day, up from 720,000 bpd it implied earlier.
Russia said OPEC’s meeting with other key oil producers on an output freeze will probably be held in Doha in next month. It said Iran supports the plan, while Tehran says it wants to double its crude exports to 4 million bpd first.
“All the data out there is suggesting higher supply and lesser demand for oil, and that could only mean lower prices,” said Phillip Streible, market strategist at RJO Futures in Chicago.
Monday’s price slide came after last week’s rally of 7 percent in U.S. crude, which was up for a fourth straight week. Brent gained 4 percent last week, up for a third week in a row.
Investment bank Morgan Stanley predicted a $25-$45 trading range for U.S. crude in an oversupplied but volatile market, concurring with several analysts’ views.
“From a longer-term perspective over the coming four to six weeks, we still anticipate an ultimate crude price decline to the $26-28 area,” said Jim Ritterbusch at Chicago energy consultancy Ritterbusch & Associates.
Money managers, including hedge funds, raised their bullish bets on U.S. crude for a third week in a row to November highs last week, but cut net long positions in Brent.
“I think we are back to inventory watching and the pressure will start moving to the bulls’ positioning as the market will likely have little patience with large net (stockpile) builds,” said Scott Shelton, broker with ICAP in Durham, North Carolina.
Additional reporting by Karolin Schaps in LONDON and Henning Gloystein in SINGAPORE; Editing by Marguerita Choy and W Simon
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