The price of crude oil hasn\’t reached a bottom yet as production keeps increasing, former Fed Chairman Alan Greenspan said.
The slump in oil prices hasn\’t curtailed output, and there\’s a huge amount bottled in the U.S., Greenspan said in an interview with Bloomberg Television on Friday. Inventories at Cushing, Oklahoma, the delivery point for U.S. benchmark futures, will keep rising, he said.
\”We are probably at the point now, where in the current rate of fill, we will run out of room in Cushing by next month,\” he explained. \”Until we find a way to get out of this dilemma, prices will continue to ease due to there being no place for your oil to visit except into the markets.\”
West Texas Intermediate futures dropped 1.9% to US$46.17 a barrel as of 9:31 a.m. Friday on the New York Mercantile Exchange. Prices are down almost 60% using their June peak.
U.S. crude stockpiles increased for nine weeks through March 6 to 448.9 million barrels, the greatest in Energy Information Administration records dating back to August 1982. The nation pumped 9.37 million each day last week, the quickest pace in weekly estimates published by the Energy Department\’s statistical arm since 1983.
Stockpiles at Cushing rose by 2.32 million barrels to 51.5 million last week, the highest level since January 2013. Cushing includes a working capacity of 70.8 million barrels, based on the EIA.
The surplus may soon strain U.S. storage capacity, renewing a slump in prices and curbing its output, the International Energy Agency said in a monthly market report Friday. The IEA boosted estimates for U.S. oil production this season as cutbacks in drilling rigs have to date failed to slow output.
Drillers have idled 653 rigs because the start of December, data from Baker Hughes Inc. show. The amount of active machines seeking oil was 922 as of March 6, the cheapest since April 2011, the services company said.
\”The rigs which have been closing down have not been affecting the capability to produce crude,\” Greenspan said. \”You are getting the inefficient rigs shutting down, but the capacity to basically build oil expansion remains there.\”