Crude oil rally halts near $40 a barrel

Hong Kong: Brent oil halted gains after rising above $40 a barrel for the first time since December on estimates that United States stockpiles, already at the highest in eight decades, expanded further.
Futures of the European benchmark lost as much as 1.6 per cent in London. US supplies probably rose 3.5 million barrels last week, according to a survey before government data on Wednesday. Ecuador’s Foreign Ministry said Latin American producers will meet on March 11 to discuss oil prices, while Russia said major suppliers may meet within weeks. China’s crude imports rose to a record in February, while product exports fell to the lowest in nine months.
Oil in London has advanced more than 40 per cent since slumping to a 12-year low in January amid speculation a proposal to freeze production will trim a global glut. A meeting among major producers to discuss capping output may be held in Russia, Doha or Vienna sometime between March 20 and April 1, Russian Energy Minister Alexander Novak said on state television last week.
“This is just the start of what is a long road to re-balancing ahead,” Amrita Sen, chief oil analyst at consultants Energy Aspects, said in a report. “With supply losses rising, prices have little reason to test the lows again,” yet a “runaway increase in prices now may delay some of the re-balancing that has started.”
Brent for May settlement fell as much as 65 cents to $40.19 a barrel on the London-based ICE Futures Europe exchange and traded at $40.60. The contract climbed $2.12 to $40.84 on Monday, the highest close since December 4. The global benchmark crude was at a premium of $1.03 to West Texas Intermediate for May.
China imports
WTI for April delivery dropped as much as 1.5 per cent to $37.35 a barrel on the New York Mercantile Exchange. The contract gained $1.98 to $37.90 on Monday, the highest close since December 24. Total volume traded was about 19 per cent above the 100-day average.
“Fundamentals are not there yet, but we’ve also seen a change in sentiment now over the past couple of weeks,” Ole Hansen, head of commodity strategy at Saxo Bank, said in a Bloomberg Television interview. “The market is starting to believe now we have seen the low.”
China increased crude imports by 19 per cent in February to 31.8 million metric tonnes from a month earlier, according to data from the Beijing-based General Administration of Customs on Tuesday. That’s equivalent to about 8.04 million barrels a day, the highest daily average on record. Oil product exports slid a second month to 2.99 million tones.
US stockpiles rise
US crude output fell for a sixth week to 9.08 million barrels a day, according to Energy Information Administration data. Stockpiles are at 518 million barrels, the most since 1930. There will probably be a price correction by the end of the year, Suhail Al Mazrouei, energy minister of the United Arab Emirates, said Monday. Saudi Arabia, Russia, Qatar and Venezuela agreed last month they would freeze output, if other producers followed suit, to tackle a global oversupply in the oil market.