Oil prices slid to three-month lows on Tuesday after OPEC reported a rise in global crude stocks and a surprise jump in production from its biggest member, Saudi Arabia, despite output curbs by the group.
The kingdom, the world’s biggest oil exporter, led OPEC to supply cuts announced last year. Signs of even modestly higher Saudi output flustered investors.
Brent futures were down 91 cents at $50.44 a barrel by 1421 GMT, after touching $50.33, their lowest since Nov. 30. U.S. crude slid $1 to $47.40 a barrel, after also dropping to its lowest since November at $47.28.
Secondary sources had said Saudi output fell in February to 9.797 million barrels per day (bpd), but Riyadh told OPEC it rose to 10.011 million bpd.
“The focus on Saudi Arabia pushing production back to 10 million bpd after cutting beyond the call of duty in January is a key driver,” Harry Tchilinguirian, global head of oil strategy at BNP Paribas, told Reuters Global Oil Forum.
“Saudi was the one compensating for the lack of compliance of others,” he said.
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Oil prices have now reversed almost all the gains notched since OPEC said on Nov. 30 that it was cutting output. Investors have been focusing on inventory data after OPEC said its cuts aimed to stabilize prices and draw down global stockpiles.
The Organization of the Petroleum Exporting Countries said in its monthly report that oil stocks in industrialized nations rose in January to stand 278 million barrels above the five-year average, with U.S. shale and other non-OPEC supply gaining.
Weekly data due on Tuesday from the American Petroleum Institute (API) is expected to show another rise in U.S. inventories, following last week’s report that revealed a bigger-than-expected increase.
“A sniff of another big crude build and down we go towards $45,” said Matt Stanley, commodities broker at Freight Investor Services.
With stockpiles growing, investors are seeking indications that OPEC will extend reductions beyond June.
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Saudi ally Kuwait said on Monday it would support an extension of the global deal. Oil Minister Essam al-Marzouq said an extension would “help bring prices to acceptable levels for oil-producing nations and the industry in general.”
Saudi Arabia has yet to indicate clearly whether it is ready to extend supply curbs.
Additional reporting by Aaron Sheldrick in Tokyo; Editing by Dale Hudson and David Clarke