Oil down second straight day; rising output reignites glut worry

Tue May 3, 2016 5:05pm EDT
 
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By Barani Krishnan

NEW YORK (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 LCOc1 settled down 86 cents, or 1.9 percent, at $44.97 a barrel.

U.S. crude's West Texas Intermediate (WTI) futures CLc1 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. [API/S] [EIA/S]

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.   Continued...

 
An offshore oil platform is seen at the Bouri Oil Field off the coast of Libya August 3, 2015.  REUTERS/Darrin Zammit Lupi