Oil Down 2nd Straight Day, Rising Output Reignites Glut Worry

Reuters

NEW YORK, May 3 (Reuters) - Oil prices fell for a second day on Tuesday, retreating further from the year's highs hit last week, as rising output renewed worries about the global glut of crude, the U.S. dollar rebounded and equity markets weakened.

Output from the biggest oil producers in the Middle East jumped last month or could surge in the near term, data showed this week, ahead of a U.S. government report on Wednesday likely to cite record high crude stockpiles.

Brent crude futures settled down 86 cents, or 1.9 percent, at $44.97 a barrel.

U.S. crude's West Texas Intermediate (WTI) futures fell $1.13, or 2.5 percent, to $43.65.

The two crude benchmarks gave back some losses in post-settlement trade after industry group American Petroleum Institute (API) reported a smaller U.S. crude stockpile build of 1.3 million barrels last week, compared with analysts' forecasts of a 1.7 million-barrel rise.

The U.S. government's Energy Information Administration (EIA) will issue official inventory data on Wednesday.

Brent and WTI both lost about 3 percent each in Monday's trade as production from the Organization of the Petroleum Exporting Countries neared all-time peaks and record speculative buying in global benchmark Brent sparked profit-taking on last month's over 21 percent rally to 2016 highs at $48.50.

April's oil rally had also narrowed the discount, or "contango," in WTI's front-month versus second-month <CLc1-CLc2> to October lows, before the gap widened again on Tuesday.

"There are enough supply stories out there to slow or temper any gains," Energy Aspects analyst Richard Mallinson said.

Iraq said this week its oil shipments from southern fields averaged 3.4 million barrels per day (bpd) in April, up from 3.3 million bpd in March.

Production from top exporter Saudi Arabia could soon return to a near-record level of 10.5 million bpd, sources said.

Iran has nearly doubled exports to almost 2 million bpd since the start of the year.

In Tuesday's session, the dollar index rose for the first time since April 22, making dollar-denominated oil less attractive to holders of the euro and other currencies.

Global equities fell, stoked by dismal data on Chinese factory activity, British manufacturing and euro zone growth.


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Brent Crude Oil : $47.35/BBL 3.18%
Light Crude Oil : $45.93/BBL 3.25%
Natural Gas : $2.99/MMBtu 1.01%
Updated in last 24 hours