Oil headed for a second annual decline as a record pace of expansion in U.S. crude stockpiles exacerbates a global glut.
Futures have lost 31 percent this year and are set for the first back-to-back loss since 1998. Inventories increased by more than 101 million barrels, or more than 25 percent, over the year, the biggest expansion in weekly Energy Information Administration data going back to 1983. Supplies at Cushing, Oklahoma, the delivery point for U.S. benchmark West Texas Intermediate crude, climbed to a record last week, according to the EIA.
Oil is trading near levels last seen during the global financial crisis amid signs the oversupply will be prolonged after the Organization of Petroleum Exporting Countries effectively abandoned output limits at a meeting earlier this month. Additionally, U.S. crude output is poised to grow for a seventh straight year.
“There is a long way to go before global supply and demand rebalancing occurs,” Angus Nicholson, a market analyst at IG Ltd. in Melbourne, said by phone. “There hasn’t been a significant cutback in oil production and there is the additional threat of Iran boosting exports. It’s going to be a dark period for the oil price during the next six months.”