Oil Prices Down One Percent As Market Nervously Awaits U.s. Inventory Data
Oil prices fell on Wednesday, with U.S. crude futures losing more than 1 percent, on data pointing to a potential build in domestic crude stockpiles that offset market bulls’ speculation of an OPEC output freeze.
The American Petroleum Institute (API), a trade group, reported on Tuesday that U.S. crude inventories rose 4.5 million barrels in the week ending Aug. 19 versus market expectations for a draw of around 500,000 barrels. [API/S] [EIA/S]
The U.S. Energy Information Administration (EIA) will release official stockpiles data at 10:30 a.m. (1430 GMT).
“Markets are tough here overall as there is no significant macro story, and the bears are still talking about inventories,” said Scott Shelton, energy futures broker at Durham in North Carolina, referring to the API numbers.
API’s report, released in after-market hours, caused crude oil futures to pare gains in Tuesday’s post-settlement trade after they had rallied earlier on the notion Iran might support an oil production freeze by the Organization of the Petroleum Exporting Countries.
Brent crude futures LCOc1 were down 30 cents, or 0.6 percent, at $49.66 a barrel by 9:50 a.m. EDT (1350 GMT).
U.S. West Texas Intermediate (WTI) futures fell 52 cents, or 1.1 percent, to $47.58.
Oil has swung from bear to bull market territory this month as renewed worries of an oil glut were subdued by speculation OPEC will agree to an output curtailment with non-members led by Russia at a meeting in Algeria next month. A similar plan failed in April and analysts remain skeptical it will work as some OPEC members keep pumping at high levels even as they tout a freeze.
“There is currently a race to print any freeze headlines but we have not yet seen strong substance behind them,” said Olivier Jakob, managing director at PetroMatrix, an energy consultancy in Zug, Switzerland.
That could lead to more market volatility, some say.
“While we can envision WTI slippage to around the $45 mark next week, we feel that OPEC prattle regarding a possible cohesive effort to restrain production will continue to encourage an influx of speculative capital on price pullbacks of around $2-$3 from yesterday's settlement,” said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
China’s state-controlled oil firm CNOOC said on Wednesday an oil price recovery was facing “significant headwinds”, as it reported swinging to a loss in the first half of the year due to weak prices.
REUTERS