By Georgi Kantchev And Nicole Friedman
Oil prices extended losses on Tuesday, with U.S. crude on track
to settle at a fresh six-year low, on worries about the global glut
of oil.
Oil futures stabilized in February amid signs that low prices
were already prompting producers to cut spending, which should
eventually lead to supply cuts. But with U.S. output at multiyear
highs and production from other major suppliers also persistently
high, U.S. oil prices have fallen to levels not seen since the
depths of the financial crisis. Brent, the global price benchmark,
has erased its February gains.
Light, sweet oil for April delivery fell 36 cents, or 0.8%, to
$43.52 a barrel on the New York Mercantile Exchange. The benchmark
U.S. options contract for April expires at settlement Tuesday,
which could cause price swings throughout the day, analysts
said.
Brent, the global benchmark, fell 95 cents, or 1.7%, to $53 a
barrel on ICE Futures Europe.
"The backlog of supplies...is still returning," London-based
consultancy Energy Aspects said in a report. For Brent futures, the
firm said, "further price downside can be expected as rising crude
production coincides with peak refinery turnarounds." Demand for
crude oil typically falls in the spring as refineries shut units to
perform seasonal maintenance.
In the U.S., oil inventories stand at their highest level in
about eight decades, and the International Energy Agency warned
last week that they are nearing storage capacity. Data provider
Genscape Inc. reported on Monday that stockpiles increased last
week at a key storage hub in Cushing, Okla.
Later on Tuesday, the American Petroleum Institute, an industry
group, will publish its inventory data. The U.S. Energy Information
Administration's weekly data is due Wednesday.
Market participants are also tracking the nuclear talks between
the U.S. and Iran for signs of progress. In recent years, Iranian
exports have been essentially capped by Western sanctions aimed at
pressuring Tehran over its nuclear ambitions. A deal easing those
sanctions could eventually translate into half a million barrels or
more a day of Iranian crude heading into the already oversupplied
global market, analysts say.
On Tuesday, ConocoPhillips Co. said it plans to spend $11.5
billion a year on capital projects in 2015 and the two following
years, down from its previous expectation of $16 billion in capital
spending a year. "We now believe it is prudent to position the
company for lower, more volatile prices for the foreseeable
future," said Chief Executive Ryan Lance in a statement.
Gasoline futures fell 0.8% to $1.7146 a gallon. Diesel futures
fell 0.4% to $1.6913 a gallon.
Write to Georgi Kantchev at georgi.kantchev@wsj.com and Nicole
Friedman at nicole.friedman@wsj.com
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