Oil prices extended losses on Wednesday after weekly inventory data showed an unexpected decline in US crude stockpiles while an increase in stockpiles of petroleum products.
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Later on Wednesday, the USA government’s Energy Information Administration (EIA) will publish its official report on commercial inventories for the week ending September 9. Analysts had expected an increase of 1.5 million barrels. The jump was the biggest weekly build since January and put distillate stocks at six-year seasonal highs.
But the EIA also reported that inventories of distillates, which include diesel and heating oil, rose by 4.6 million barrels last week, versus analysts’ expectations of an increase of 1.5 million barrels.
Gasoline inventories in the week to September 9, according to the EIA, were up by 600,000 barrels, after a 4.2-million-barrel decline in the previous week, still above what’s normal for this time of year, the EIA noted. Cushing, Oklahoma crude stocks fell by 1.12 million barrels, they said.
“We’ve seen a lot of bearish news this week: Libya, Nigeria, skeptical monthly reports from the IEA and OPEC and large stockbuilding in the USA, so weak fundamentals are weighing on the market”, said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg. U.S. West Texas Intermediate futures were down 36 cents, or 0.8 percent, at $43.55 a barrel. November Brent fell 76 cents, or 1.6 percent, to $46.34 a barrel on ICE Futures Europe. US equities rose more than 1 percent.
“So the million-dollar question is really a 14.5 million barrel question.as in where did all those barrels go to?”
“More heartbreak in the oil market overnight for bulls”, said Jeffrey Halley, senior market analyst with OANDA trading.
EIA’s data is once again in contrast to the figures released by the API, whose estimate was more optimistic than analyst expectations. “Next week’s report will be telling, whether last week’s lost barrels finally show up in the petroleum balance sheet”, said John Kilduff, partner at NY energy hedge fund Again Capital.
The agency said that, despite low oil prices, demand growth continues to slow while supplies increase.
Oil held below $44 a barrel amid speculation the global crude glut will expand as OPEC members Libya and Nigeria prepare to boost exports within weeks.
Falling US crude stockpiles tend to push prices higher because they indicate strengthening demand in top global oil consumer, the United States.
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Crude oil prices edged up on Wednesday, buoyed by bargain hunting following a sharp selloff on Tuesday on worries that the global glut could last longer than expected.
