(Bloomberg) -- Oil extended its slide following an industry report that American crude storage surged.
Futures in New York fell as much as 1.6 percent in after-hours trading. After concerns over Middle East tensions lifted crude close to January highs last week, an anticipated build in U.S. stockpiles is keeping a lid on prices ahead of a government report on Wednesday. An American Petroleum Institute tally on Tuesday was said to show a 5.32-million-barrel jump, way higher than expected.
“It’s slowing the momentum just enough to stop us from making new highs right now,” said Phil Flynn, senior market analyst at Price Futures Group. Inventory data this week is “going to be critical for the mood of the market.”
Oil neared the $66.66 reached earlier this year as President Donald Trump appointed John Bolton for national security adviser last week, signaling the U.S. may pursue a more hawkish approach against Iran and disrupt outflows from the OPEC member. While global stockpiles are tightening with OPEC’s production cuts, fears remain that surging American production could thwart those efforts.
“Oil prices gained and now they’re testing this key resistance level” of the January high, said Hans Van Cleef, senior energy economist at ABN Amro. “We’re waiting for the inventory data to see if it can push prices higher. Markets expect them to remain little changed, so any surprise drop could do the trick.”
West Texas Intermediate crude for May delivery fell 90 cents, or 1.4 percent, to $64.65 at 4:55 p.m. on the New York Mercantile Exchange. It had settled 30 cents lower at $65.25.
Brent for May settlement fell 1 cent to close at $70.11 a barrel on the London-based ICE Futures Europe exchange. Both benchmarks erased gains of as much as 1.3 percent earlier in the day.
The API estimate was much higher than the 850,000-barrel increase in a Bloomberg survey. The U.S. Energy Information Administration will disclose its weekly storage tally on Wednesday.
Stockpiles at Cushing, Oklahoma, the main U.S. storage hub, rose 1.66 million barrels, the API was said to report. That would be the biggest increase in a year if confirmed by the EIA.
“The market is in the holding pattern still,” said Thomas Finlon, director at Energy Analytics Group.
Other oil news:
- In China, oil futures for September delivery declined 1.7 percent to 426.4 yuan ($68) a barrel on Tuesday. The contract had its debut in Shanghai on Monday.
- Chevron Corp. is studding the ocean floor with heavy-duty pumping gear as part of an effort to make deepwater oil discoveries competitive with shale.
- More than a year after exiting bankruptcy, SandRidge Energy Inc. has seen its stock sink 37 percent since October 2016, despite a restructuring that wiped out $4 billion in debt.
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