Energy stocks continue on their roller coaster ride with no one certain where and when it will reach bottom.
Oil prices have been tumbling for months on reports of excess U.S. slate inventories, hitting record lows and then jumping back up for a day or two. Reports on U.S. resources hit record highs on Thursday while reports of continued oversupplies emanating out of Saudi Arabia stoked new fears of future price lows.
Benchmark Brent crude futures for April fell below $60 a barrel, trading at $59.36 a barrel, down $1.17 extending declines from Tuesday's two-month high of $63. U.S. crude for March delivery, which expires on Friday, was down $1.69 at $50.45 after dropping as much as 3.7 percent to an intraday low of $50.23 earlier.
Data released by the American Petroleum Institute showed a surprising rise in U.S. crude supplies to 14.3 million barrels last week, far more than analyst outlooks of an increase of only 3.2 million barrels.
Should the report due out at 1600 GMT by the U.S. Energy Information Administration confirm this latest build-up it would point to the largest weekly increase in barrels since data was recorded in 1982.
"U.S. shale production has not budged, resulting in swelling inventories,'' said Ken Hasegawa, commodity sales manager at Tokyo's Newedge Japan.
Continuing Supply Glut
But the lower U.S. rig amounts will result only in cuts in American output later this year and current surplus amounts could become even worse before a balanced market materializes.
"Crude oil prices declined on concerns that the recent rally is overdone amid a continuing supply glut. The price rise of 34 percent since the mid-Jan has largely been fueled by cuts to capital spending and falling U.S. rig counts, which have yet to result in a fall in near-term production," a representative at ANZ bank said.
At the same time, production from Saudi Arabia, the world's largest oil exporter, may be on the rise closing in on 10 million barrels per day and the lower oil prices have prompted the state oil company, Saudi Aramco, to turn to banking institutions for a $10 billion loan to tide it over.
The API and EIA data reports are a day late this week because of a U.S. holiday on Monday.