Oil prices fell about 2 percent to three-week lows on Wednesday as the USA government reported a bigger build than expected in crude stockpiles, although significant drawdowns in gasoline and distillates prevented a steeper slide in crude futures.
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West Texas Intermediate oil futures fell sharply on Wednesday, amid speculation weekly supply data due to later in the session will show US crude inventories rose at a faster pace than expected last week.
Light, sweet crude for December delivery recently rose 78 cents, or 1.7%, to $45.98 a barrel on the New York Mercantile Exchange.
Sanjeev Gupta, head of the Asia Pacific oil and gas practice at professional services firm EY, said the market will also be seeking clues from a meeting of OPEC and non-OPEC technical experts in Vienna on Wednesday.
Gupta said the market would be looking at a December 4 policy-setting meeting of the Organization of the Petroleum Exporting Countries which is expected to “provide vital clues about price development in the medium term”.
Brent crude for December delivery had fallen 16 cents to $48.55 a barrel by 0144 GMT after settling up 10 cents in the previous session.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $2.63 a barrel, compared to $2.65 by close of trade on Wednesday.
Bernard Aw, market strategist at IG markets in Singapore, said traders had “renewed concerns” over the worsening oversupply problem.
“The products draw is providing a bullish tilt to the market”, said Matt Smith, commodity research director for the New York-headquartered energy consultancy and database Clipperdata.
“If open interest is high and the market is coming off, which it has over the last two weeks, then there is always a danger of short-covering”, PVM’s Varga said.
Iranian Oil Minister Bijan Namdar Zanganeh says OPEC cartel members should cut crude output so prices can bounce back to $70-$80 per barrel. The company later said the refinery was “stable” and running at “reduced rates on an interim basis”, prompting prices to turn lower again.
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The country also released disappointing data on investment and industrial production. The agency noted that OPEC production totaled 31.72 million barrels a day in September and that the call on OPEC supply will drop to 31.1 million barrels a day in 2016.
