by BLOOMBERG

LONDON • Oil extended its biggest decline in three weeks as US data showed inventories and production both surged, while the dollar gained.

Futures in New York fell as much as 0.9%, after losing 3.6% in the previous two sessions. US crude stockpiles last week rose to the highest level since December, exceeding analysts’ forecasts, while petrol reserves expanded at four times the predicted rate. Meanwhile, data for November showed the shale boom drove US output to a record.

Oil has erased most of the gains it made since the start of the year as growing stockpiles and rising US production threaten efforts by the OPEC and its allies to curb a global oversupply. OPEC’s head will meet with American shale company executives for dinner on Monday in Houston as the group looks for ways to ensure the success of its supply-cuts policy.

Wednesday’s US inventory data were “a bearish set, at least on a headline level”, said Torbjorn Kjus, chief oil analyst at DNB Bank ASA in Oslo. “Also, we’ve seen a tight relationship with the dollar in the last two or three days.”

The Bloomberg Dollar Spot index gained as much as 0.2% yesterday, making commodities priced in the US currency less attractive.

West Texas Intermediate (WTI) for April delivery lost 44 cents, or 0.7%, to US$61.20 (RM240.15) a barrel on the New York Mercantile Exchange at 11am London time yesterday. Prices slumped 2.2% on Wednesday for their biggest decline since Feb 9. Total volume traded yesterday was about 21% above the 100-day average.

Brent for May settlement fell 49 cents to US$64.24 on the London-based ICE Futures Europe Exchange, after dropping 2.7% on Wednesday. Frontmonth futures traded at a US$3.23 premium to May WTI.

US stockpiles of oil stored in tanks and terminals rose by 3.02 million barrels to about 423 million, the fourth increase in five weeks, according to the Energy Information Administration (EIA). That compares to a median estimate for a three million-barrel gain in a Bloomberg survey. Petrol inventories expanded by 2.48 million barrels, more than the 600,000-barrel average estimate.

As for production, US output reached a record high in November, bypassing Saudi Arabia late last year and nipping at the heels of Russia, the world’s largest producer. That’s helped boost American exports, with the combined shipments of crude, petrol and distillates expanding to 7.3 million barrels a day in December, the largest volume ever in EIA data. — Bloomberg