Oil Trades Below $31 as Rising U.S. Crude Stockpiles Expand Glut

Oil traded below $31 a barrel after U.S. crude stockpiles rose to the highest in more than eight decades as Saudi Arabia and Russia propose to freeze output amid a worldwide surplus.

Futures lost as much as 1.4 percent in New York, trimming the first weekly advance this month. U.S. supplies expanded to 504 million barrels, the highest level in data going back to 1930, according to the Energy Information Administration.

 Iraq said Thursday it backs any decision to support prices and balance the market without indicating whether it would cap its own output.

"The market was caught by surprise by the rise in the U.S. inventories," Jens Pedersen, a Danske Bank A/S analyst in Copenhagen, said by phone.

Crude is still down about 18 percent this year after the Organization of Petroleum Exporting Countries abandoned output targets in early December amid swelling U.S. stockpiles and as Iran seeks to boost exports to regain market share after sanctions were lifted.

Companies are confronting rating downgrades and oil-producing nations face bigger-than-expected withdrawals from wealth funds to cover budget deficits as energy revenues fall.

West Texas Intermediate for March delivery, which expires Monday, fell as much as 42 cents to $30.35 a barrel on the New York Mercantile Exchange and was at $30.56 at 9:38 a.m. London time.

Prices are up 3.8 percent this week. Total volume traded was about 2 percent below the 100-day average. The more-active April future was 1 cent lower at $32.92 a barrel.