Oil fell more than $1 a barrel on Wednesday as US government data showed crude stocks were at their highest since 1993. The Energy Information Administrations weekly inventory report showed a more-than-expected 3.3 million-barrel rise in US crude supplies, to 356.6 million barrels, for the week ending March 20. US light crude for May delivery settled down $1.21 to $52.77 per barrel. London Brent crude settled down $1.75 at $51.75.
"Crude (stocks) still extremely high, distillates still extremely high...so big picture, its still overall not pretty, inventory-wise," said Tom Bentz, senior commodity analyst at BNP Paribas Commodity Futures in New York. Oil has tumbled about $100 from highs above $147 last July as the global economic crisis has dented energy demand world-wide. In an attempt to stem the fall in prices, the Organisation of the Petroleum Exporting Countries has aimed to cut output by 4.2 million barrels from September levels. An EIA report on Wednesday estimated that the producing group as a whole reached a 67 percent compliance to the targeted cuts in February.
The biggest producer, Saudi Arabia, picked up the slack for other less vigilant members, complying 100 percent to the cuts, the EIA said. Japan, the worlds second-largest economy, posted a record drop in February for exports - down 49.4 percent - as global demand for Japanese cars and electronics evaporated. Crude oil import volumes to Japan fell 13.9 percent in February, their lowest tally for the month in 20 years, preliminary data from Japans Ministry of Finance showed.
Analysts said an excess of crude supply on world markets would not disappear soon, with little sign of demand picking up. "We havent seen a dramatic uptick in demand and until we see that, theres going to be a trading range where the mid- to upper 50s is probably more of a sell signal and in the low forties a bit of a buy signal.
Were going to be rangebound here until we see some real news on demand," said Mike Zarembski senior commodities analyst at OptionsXpress in Chicago. On Tuesday, President Barack Obama renewed calls for leading economies to boost stimulus spending, repair credit markets and extend aid to poor countries when Group of 20 leaders meet in London on April 2.
Speaking with cautious optimism on Wednesday, a Chinese central bank adviser said China, the worlds third-largest economy, was showing signs of improvement. "Before (the economy) bottoms out, it has to bottom. I believe it has bottomed, with the stimulus package and signs of recovery in some industries," said Fan Gang, who sits on the Chinese central banks monetary policy advisory committee, in a Reuters interview in Hong Kong.
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