Investing.com - West Texas Intermediate oil futures traded near the lowest level in six years on Wednesday, amid speculation weekly supply data due later in the session will show U.S. crude inventories rose to the highest level on record last week.
Wednesday's government report was expected to show that U.S. crude oil stockpiles rose by 3.8 million barrels last week, while gasoline stockpiles were forecast to decrease by 0.9 million barrels.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories increased by 10.5 million barrels in the week ended March 13, compared to expectations for a gain of 3.8 million.
The report also showed that gasoline stockpiles fell by 583,000 barrels, while distillate stocks decreased by 252,000 barrels.
On the New York Mercantile Exchange, crude oil for delivery in April slumped 88 cents, or 2.02%, to trade at $42.58 a barrel during European morning hours. Meanwhile, the May Nymex contract was down 54 cents, or 1.19%, at $44.65 a barrel.
A day earlier, the front-month contract fell to $42.41, a level not seen since March 2009, before ending at $43.46, down 42 cents, or 0.96%, as ongoing concerns over a glut in supplies drove down prices.
Total U.S. crude oil inventories stood at 448.9 million barrels as of last week, the most in at least 80 years, indicating that cheap prices have yet to affect output.
According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. fell by 56 last week to 866, the 14th straight week of declines.
The number of working U.S. oil rigs is 46% lower than an all-time high of 1,609 hit in October.
Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.
Concerns over diminishing spare capacity to store excess oil in the U.S. and China also weighed, according to market participants.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for May delivery declined 35 cents, or 0.64%, to trade at $53.17 a barrel.
London-traded Brent prices touched $52.57 on Tuesday, the lowest level since February 2, before closing at $53.51, down 43 cents, or 0.8%.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $8.52 a barrel, compared to $8.32 by close of trade on Tuesday.
Market players monitored developments surrounding talks between Iran and world powers over Tehran's nuclear program.
A senior U.S. official said Tuesday that there are some signs of progress in discussions with Tehran over its disputed nuclear industry in exchange for a gradual end to sanctions on the Islamic Republic.
Any sign of a deal between Iran and world powers could result in a flood of Iranian crude returning to the market which is already oversupplied.
Oil prices have fallen sharply in recent months as OPEC resisted calls to cut output, while the U.S. pumped at the fastest pace in more than three decades, creating a glut in global supplies.
Elsewhere, the U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, fell 0.1% to 99.92, moving away from recent 12-year peak of 100.77.
Market participants were looking ahead to Wednesday's Federal Reserve statement to see if it would drop its reference to being patient before raising rates.
Traders would interpret such a move as a sign that the central bank could raise rates as early as its June monetary policy meeting.
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