US oil settles at $53.83 a barrel, down 18 cents after crude stocks build to record high

Oil jack pumps in the Kern River oil field in Bakersfield, California.
Jonathan Alcorn | Reuters

Oil prices were largely steady on Wednesday, paring gains and briefly turning negative, after crude inventories in the United States rose to a record high.

U.S. crude stockpiles rose 1.5 million barrels last week, less than forecast, but touching a record high at 520.2 million barrels after eight straight weekly builds.

The consecutive increases have fueled worries that demand growth may not be sufficient to soak up the global oil glut despite a deal by major oil producers to cut output during the first half of the year.

Despite the reaction to the data, oil remained locked within a tight trading range. Rising U.S. production has tempered expectations that the market will rebalance as evidence emerges that OPEC producers are complying with an agreement to cut production.

"The EIA stats don't offer much in the way of surprises this week," said David Thompson, executive vice-president at Powerhouse, an energy-specialized commodities broker in Washington.

"Lack of weather-generated demand for heating oil will be offset in coming weeks by agricultural demand, but with refineries coming back into service, the market looks capable of meeting any increased demand."

By 2:44 p.m. ET (1944 GMT), U.S. West Texas Intermediate (WTI) futures for April delivery was down 18 cents at $53.83.

May Brent crude futures was 15 cents lower at $56.36 a barrel after earlier trading as high as $57.05 a barrel.

The Organization of the Petroleum Exporting Countries reduced its oil output for a second month in February, a Reuters survey found, showing the exporter group has boosted already strong compliance to around 94 percent.

Heftier cuts by Saudi Arabia and Angola helped offset weaker compliance by other members that agreed to limit their output. However, oil production in Russia, which pledged to cut its oil output by 300,000 barrels per day under an agreement with OPEC, fell in February to around 11.10 million bpd from over 11.2 million bpd in October, two sources familiar with the data told Reuters, showing weak compliance with agreed supply curbs.

The market offered little reaction to news of a rise in North Sea crude supply next month. Loading programmes for the four crudes that underpin dated Brent showed a rise to 908,000 barrels per day from March's 884,000 bpd.

Correction: This story has been updated to reflect U.S. oil settled at $53.83 a barrel, down 18 cents.