* U.S. crude stocks surge by 19 million barrels, most ever
-EIA
* IEA sees huge drop in demand for 2020
* No strategic oil purchases yet
(Updates prices, market activity, comments to settlement)
By Laila Kearney
NEW YORK, April 15 (Reuters) - U.S. crude prices fell to an
18-year low and Brent lost more than 6% on Wednesday after the
United States reported its biggest weekly inventory build on
record, while global demand is expected to fall to
quarter-century lows due to the coronavirus pandemic.
The grim figures undercut the positive feeling from the
weekend agreement between global oil producers to phase-in a
record output cut, making clear that supply reductions would not
be enough to prevent storage from filling and leaving countless
barrels stranded.
"We have crude oil backing up in the system in epic
fashion," John Kilduff, a partner at Again Capital in New York,
said after the U.S. government's weekly oil inventory report.
"This is probably one of the most bearish, if not darkest
reports I've ever seen."
Brent crude LCOc1 settled at $27.69 a barrel, dropping
$1.91, or 6.45%. U.S. West Texas Intermediate crude CLc1
settled at $19.87 a barrel, shedding 24 cents, or 1.19%. WTI
logged its lowest close since February 2002.
For WTI to move much lower, the United States will likely
need to near crude storage capacity, said Gene McGillian, vice
president of market research at Tradition Energy in Stamford,
Connecticut.
"The market is showing at near two-decade lows that we need
to have more evidence that we're going to have a huge glut on
our hands that will take some time for it to be whittled away
before people get aggressively short below $20," McGillian said.
Crude stocks in the United States, the biggest
crude-producing country, surged by 19 million barrels last week,
while refiners cut capacity use to their lowest levels since
2008 due to plummeting demand caused by efforts to curb the
spread of the novel virus, the U.S. Energy Information
Administration said. EIA/S
The inventory report came shortly after the International
Energy Agency (IEA) forecast oil demand would dive 29 million
barrels a day in April to levels unseen in 25 years and said no
output cut could fully offset the near-term falls facing the
market. IEA/M
The Organization of the Petroleum Exporting Countries, along
with Russia and other producers - a grouping known as OPEC+ -
has partnered with other oil-pumping nations, such as the United
States, in the record global supply agreement.
Markets rallied in advance of the pact, under which the
OPEC+ group will cut 9.7 million barrels per day, along with a
hoped-for additional 10 million bpd from other nations. However,
it is unclear if the total cuts, which include purchases into
strategic reserves and market-induced reductions, will approach
the lofty 20 million bpd figure touted by some, including Saudi
officials. "There is no feasible agreement that could cut supply by
enough to offset such near-term demand losses," the IEA said in
its monthly report.
Officials and sources from OPEC+ states indicated the IEA,
the energy watchdog for the world's most industrialized nations,
could announce purchases of oil for storage of up to several
million barrels to buoy the deal. As crude tank farms around the United States and globally
fill, oil futures contracts suggest a heavy glut will overhang
markets for months. Current contracts are trading at a lower
price than contracts expiring several months from now.
But as of Wednesday, no such IEA purchases had materialized.
The agency, in its report, said it was "still waiting for more
details on some planned production cuts and proposals to use
strategic storage." IEA/M
The United States, India, China and South Korea have either
offered or are considering such purchases, the IEA added.