Oil slides, hits three-month lows as Saudi output rises

By Scott DiSavino

NEW YORK (Reuters) - Oil prices slid to three-month lows on Tuesday after OPEC reported a rise in global crude stocks and a surprise jump in production from its biggest member, Saudi Arabia, that came despite output curbs by the group.

Even though OPEC made an upward revision to its global demand outlook, signs of even modestly higher Saudi output flustered investors. The selloff sent prices to their lowest levels since Nov. 30 when the kingdom, the world's biggest oil exporter, led the Organization of the Petroleum Exporting Countries (OPEC) to cut supplies.

Brent futures, which fell below their 200-day moving average for the first time since late November, were down 57 cents, or 1.1 percent at $50.78 a barrel by 1:55 p.m. EDT (1755 GMT).

 

U.S. West Texas Intermediate crude were down 76 cents, or 1.6 percent, at $47.64 per barrel. It was on track for its seventh straight daily decline, which would be its longest such streak since January 2016.

On technical charts, Brent and WTI both remained in oversold territory for a fifth day in a row, their longest such streaks since November.

The Brent front-month premium over the corresponding U.S. contract rose to its highest since late January.

Secondary sources had said Saudi output fell in February to 9.797 million barrels per day (bpd), but Riyadh told OPEC it rose to 10.011 million bpd.

In an effort to dispel market concerns, the Saudi energy ministry said the "difference between what the market observes as production, and the actual supply levels in any given month, is due to operational factors that are influenced by storage adjustments and other month to month variables."

Oil prices have given back almost all gains notched since OPEC's Nov. 30 announcement of cuts aimed to stabilize prices and draw down global stockpiles.

"Oil prices have come under renewed pressure after the latest OPEC report showed a rise in global crude inventory despite the cartel deciding to curtail its output," said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London.

OPEC's monthly report said oil stocks in industrialised nations rose in January to 278 million barrels above the five-year average, with U.S. shale and other non-OPEC supply gaining.

This week's data is expected to show another rise in U.S. inventories after last week's bigger-than-expected increase. [EIA/S]

It would be the 10th consecutive weekly increase in U.S. crude stocks, boosting total inventories, including strategic reserves, further past the 1.22 billion barrel record high hit during the week ended March 3.

The American Petroleum Institute reports its stockpile data on Tuesday afternoon at 4:30 p.m EDT ahead of official U.S. government data Wednesday morning.

Saudi Arabia has yet to indicate clearly whether it is ready to extend supply curbs.

On Monday, Kuwait said it would support an extension of the global deal. Oil Minister Essam al-Marzouq said an extension would "help bring prices to acceptable levels for oil-producing nations and the industry in general."

(Additional reporting by Edmund Blair in London and Aaron Sheldrick in Tokyo; Editing by David Gregorio and Dale Hudson)