Brent crude oil fell to around $54 a barrel yesterday, its lowest for more than a month, on rising global inventories and signs of a possible nuclear deal with Tehran that could allow more Iranian oil exports.
Western powers are hoping for concessions from Tehran that could help clinch an agreement in nuclear talks this week after the United States and European powers voiced a willingness to compromise on suspending UN sanctions.
Brent LCOc1 for April dropped $1.34 to $53.33, its lowest since early February, before recovering some ground to trade around $54.00.
US crude CLc1 fell to $43.57 in early trading, its lowest since March 2009, before rebounding to around $44.35.
Both benchmark crude futures contracts have fallen over the last two weeks on mounting evidence of a global glut that is filling oil inventories rapidly.
World stockpiles are rising at a rate of 1.6 million barrels per day (bpd), French bank Societe Generale estimates, and it forecasts the build will accelerate to 1.7 million bpd in the second quarter.
“Another wave of weakness hit the oil markets last week, and we expect it to continue,” Societe Generale oil analyst Michael Wittner said.
“The arithmetic works out to a combined build in crude oil and refined products of approximately 200 million barrels in March-June.
“Any way you slice it, this is bearish for prices.”
China has been taking advantage of low prices to build up its strategic petroleum reserves, but analysts say new spare capacity will only become available later this year, denting near-term import needs.