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Oil prices dive before U.S. inventories data

The largest USA -listed ETF tied to the price of WTI crude oil has fallen about 2.5% year-to-date in very volatile trading.

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The U.S. Energy Information Administration (EIA) said crude stockpiles rose for a second straight week, building by 2.3 million barrels in the last week, compared with analysts expectations for a rise of 921,000 barrels.

Crude oil prices extended losses on Wednesday, pressured by a strong US dollar and high stocks of physical oil, though prices remained on track for a monthly gain of 10 percent.

Crude oil futures fell 0.29 per cent to Rs 3,116 per barrel today, in line with a weak trend in Asian trade, as speculators indulged in trimming positions. The new front month will be November and it was trading at $48.21. Tracking the most-active contracts, prices were poised for a monthly gain of roughly 10.3%, according to FactSet data, which would be the largest since April. Production fell to 9.51 million barrels per day in the latest week, versus 9.66 million barrels per day in the previous week. We expect WTI/Brent to trade in a $1.50 to $2.00 range. For the month, it was down 0.4%.

Official US oil inventories data published by the EIA is due for release on Wednesday. However, it estimated that United States distillate inventories rose by 3 million barrels for the same period. While the API also cited a bullish gasoline draw of 1.6 million barrels, the rise of almost 3 million barrels it had for distillates, which include diesel, weighed heavily on market sentiment, analysts said.

For over two years, the global oil market has been roiled by a tenacious surplus of crude.

Market watchers may still be searching for clues on what possible meaningful action members of the Organization of Petroleum Exporting Countries may take during a summit in September in Algeria.

Chances that the upcoming meeting among major oil producers in late September would yield any action to reduce the global glut appeared minimal after Saudi Arabia’s energy minister said last week that he does not believe any “significant intervention” in the oil market is necessary.

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Iran, for example, has repeatedly snubbed a proposal for a collective production freeze, saying it would continue to pump until its output is on par with that before the sanctions.

Oil prices dip on stronger dollar; rise in U.S. crude stocks data