Oil dropped a fourth day before a report that’s forecast to show increasing U.S. crude stockpiles have kept inventories at the highest level in more than eight decades.
Futures fell as much as 3.5 percent in New York. Supplies probably climbed by 3 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday.
“The longs are getting chased out,” said Gary Cunningham, head of market research at Tradition Energy in Stamford, Connecticut. “Global production is still rising and U.S. inventories probably climbed last week to the highest in more than 80 years. We just can’t maintain oil at $40.”
Oil tumbled to a 12-year low last month before rebounding on speculation the global surplus will ease as U.S. output declines. Saudi Arabia, Russia, Qatar and Venezuela agreed last month they would cap production at January levels if other producers followed suit to tackle the oversupply. They will meet again with other countries in Doha on April 17.
West Texas Intermediate for May delivery fell $1.13, or 2.9 percent, to $38.26 a barrel at 10:13 a.m. on the New York Mercantile Exchange. Futures touched $38, the lowest since March 16. Total volume traded was 56 percent below the 100-day average.
Speculator Wagers
Brent for May settlement dropped $1.16, or 2.9 percent, to $39.11 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude was at an 85-cent premium to WTI.

U.S. Inventories

“The noises coming out ahead of the producer meeting aren’t cause for optimism,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “We’re also expecting another big inventory build.”
U.S. crude inventories increased to 532.5 million barrels in the week ended March 18, according to data from the EIA. Gasoline stockpiles probably dropped by 2.5 million barrels last week, according to the median estimate in the Bloomberg survey. That would be a sixth weekly decline.
 

Source: Bloomberg, March 29