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Oil Weakens as US Crude Poised for First Monthly Decline Since August

February 28, 2018 at 17:57 by Andrew Moran

Oil futures are on the decline midweek following a new US government report that found domestic crude stockpiles rose much more than expected. US crude prices are on track for their first monthly decrease since August.

April West Texas Intermediate (WTI) crude futures tumbled $0.70, or 1.11%, to $62.31 per barrel at 16:36 GMT on Wednesday on the New York Mercantile Exchange. US crude prices are set to record a 3.5% monthly drop, the first since August.

Brent, the international crude benchmark, is also bleeding red ink in the middle of the trading week. April Brent crude futures slipped $0.82, or 1.23%, to $65.81 a barrel on London’s ICE Futures exchange. Brent prices will post a monthly slide of more than 4%.

Year-to-date, US crude has advanced nearly 4%, while Brent crude has dipped about 1%.

According to the US Energy Information Administration (EIA), domestic crude stockpiles climbed by three million barrels for week ending February 23, while US production jumped 13,000 barrels per day (bpd) to 10.283 million bpd. Gasoline supplies edged up 2.5 million barrels, while distillate stockpiles plummeted by one million barrels.

A rising US dollar applied further pressure to oil prices as the greenback increased 0.20%. Following Federal Reserve Chair Jerome Powell’s positive testimony to Congress, the buck strengthened, posting a monthly gain of 1.5%. A strengthening currency is bad for dollar-denominated commodities because it makes it more expensive for foreign investors to acquire.

The latest Baker Hughes oil rig count stands at 799, up from 765 at the beginning of the month. It is still roughly half of its 2014 peak of just under 1,600.

In other energy markets, April natural gas futures were flat at $2.676 per million British thermal units (btu) – the contract plummeted more than 6% in February. March gasoline futures shed $0.039, or 2.17%, to $1.764 per gallon. March heating oil futures slid $0.039, or 2.00%, to $1.92 a gallon.

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