US crude steady as strong gasoline demand offset by record stocks

In a sign of the excess supply, USA crude stockpiles rose 3.5 million barrels last week to an all-time peak above 507 million barrels, data from the Department of Energy showed on Wednesday.

The U.S. Energy Information Administration will report official inventory data later on Wednesday.

U.S. benchmark West Texas Intermediate (WTI) for delivery in April rose 28 cents to $32.15 a barrel on the New York Mercantile Exchange.

At a conference in Houston, Saudi Arabia’s oil minister Ali Al-Naimi dismissed the possibility of a supply cut coming from his country, saying prices should be determined by market forces and that market rebalancing will occur when low prices squeeze out the production of oil that is the most expensive to extract and sell. In monthly data, which doesn’t line up exactly with weekly data, inventories last exceeded 500 million barrels in 1930.

The inventories have further to rise as US refiners are heading into their regular maintenance season that usually reduces demand, said Michael Poulsen, oil analyst at Global Risk Management. But gasoline stockpiles fell for the first time since early November after some refineries cut back production in response to low margins. Read, Why Did Cushing Crude Oil Stocks Hit a New Record? for a closer look at the Cushing inventory.

Last week four oil majors, including Russian Federation and Saudi Arabia, agreed to freeze production at January output levels on the condition that other producers follow suit.

Tehran has repeatedly said it wouldn’t consider a supply reduction until its production has climbed back to its pre- sanction level, which was around 4 million barrels a day. USA crude fell $1.16 to $30.71.

Also on Wednesday, Royal Dutch Shell A (N:RDSa) announced that it is shutting down its shale resources unit while parting ways with US country chairman Marvin Odum, as part of a comprehensive cost-cutting initiative in response to its worst year of revenues in more than a decade.

One stumbling block in attempts to forge a wider agreement is Iran, which is increasing output following the lifting of Western sanctions in January and whose oil minister was quoted on Tuesday as calling the deal “laughable”. A number of top oil and gas companies are reportedly teetering on the verge of bankruptcy, as oil hovers near its lowest level in more than a decade.

But the rally did not last into Friday as traders estimated that a freeze in production would not reduce a glut that has pulled down prices by 70 percent since 2014.

The euro was up 0.1 per cent at $1.1023 after three days of decline against the dollar.

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