Oil Prices Fall Amid Record Inventories

Dow Jones Newswires

Oil prices fell Thursday on expectations that record-high crude inventories would continue to grow.

Light, sweet crude for April delivery settled down 70 cents, or 1.6%, to $43.96 a barrel on the New York Mercantile Exchange.

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Brent, the global benchmark, fell $1.48, or 2.6%, to $54.43 a barrel on ICE Futures Europe.

A global glut of crude sent prices plummeting in the second half of 2014, and analysts estimate the market is currently oversupplied by between one million and 1.5 million barrels a day.

The oversupply has been especially concentrated in recent months in the U.S., where stored supplies of crude have climbed for 10 straight weeks and currently sit at their highest level in about 80 years, according to the Energy Information Administration.

Traders have grown concerned that inventories could reach maximum capacity in some regions, a situation that could cause further price drops if some buyers stop purchasing crude because they have nowhere to store it.

Inventories at Cushing, Okla., the delivery point for the Nymex contract, rose by 2.9 million barrels last week to 54.4 million barrels, the highest level on record. The EIA said in September that Cushing's working storage capacity was 70.8 million barrels.

"If you look at the storage numbers, they just keep adding," said Oleg Girko, senior broker at BBSP Partners SAS. "Everybody keeps talking: 'When will Cushing be full? When is it going to happen?'"

Genscape Inc., a data provider, told its subscribers Thursday that Cushing supplies rose by 2.2 million barrels in the week ended Tuesday, according to a person familiar with the report.

Oil prices had gained on Wednesday, breaking a six-session losing streak, on the back of a sharp decline in the dollar after the Federal Reserve indicated it was in no hurry to raise interest rates. But the dollar was on the rise again on Thursday. Oil is priced in dollars and becomes less attractive for holders of foreign currencies as the dollar appreciates.

Gasoline futures fell 2.48 cents, or 1.4%, to $1.7743 a gallon, while diesel futures slipped 5.02 cents, or 2.8%, to $1.7223 a gallon.