US crude inventories rise to highest level in 80 years, as oil prices tumble

US crude inventories soared to 458.5m barrels in the week ended 13 March, their highest level in 80 years, data released on Wednesday showed.

According to the Energy Information Administration, crude stockpiles increased by 9.6m barrels week-on-week in the seven days to 13 March, against analysts’ expectations for an increase of 4.4m barrels.

A growing supply glut in US crude has weighed on oil prices over the last couple of days, with the April contract for West Texas Intermediate trading at $42.28 a barrel at 10:47 in New York on Wednesday, after losing 18% over the last two weeks.

The prompt month NYMEX contract was due to expire on 20 March.

Over the same period, front month Brent crude futures have lost over 13% to $53.19 a barrel, as concerns of global oversupply have been fuelled by a timid recovery in Libya’s production and the potential boost to Iran’s exports, should the West lifts its sanctions.

The EIA added that crude stocks at the Cushing delivery hub in Oklahoma rose by 54.5m barrels last week.

On Wednesday, investors will closely monitor the statement from the Federal Open Market Committee, which could give a more detailed indication over the timing of a hike in interest rates by the Federal Reserve.

That could impact on the US dollar and oil prices. However, analysts have warned that despite the sustained declined in oil prices, retail sales have disappointed, which could lead to a more dovish Fed statement than expected by some.

“The so called consumer boost that this fall in oil prices was supposed to bring about hasn’t materialised with retail sales and durable goods spending coming in at negative levels over the past three to four months,” said CMC Markets analyst Michael Hewson.

“Against this backdrop it is hard to imagine what would cause the Federal Reserve to adopt a more hawkish tone.”