Oil Slips as Industry Said to Report Surprise U.S. Supply BuildBy
API said to report U.S. crude stocks rose 2.75 million barrels
OPEC’s production climbed by 336,100 barrels a day in May
Oil erased gains after an industry report was said to show U.S. crude stockpiles unexpectedly increased last week.
Inventories rose by 2.75 million barrels in the American Petroleum Institute report released Tuesday, people familiar with the data said. That contrasts with a forecast that the Energy Information Administration will report a 2.45 million-barrel decline on Wednesday, according to analysts surveyed by Bloomberg.
“The headline number on crude was high,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said by telephone. “It took away some of the excitement, brought us back to this $46.”
Oil has lingered near $46 a barrel since the EIA reported last week that total U.S. crude and product stockpiles jumped by the most since 2008 in the week ended June 2. Saudi Arabia has sought to allay fears that the supply glut isn’t abating, with Energy Minister Khalid Al-Falih saying inventories are beginning to shrink and reductions will accelerate in the next three to four months.
West Texas Intermediate for July delivery fell to $46.03 a barrel at 4:43 p.m. on the New York Mercantile Exchange following the API report, after gaining 38 cents in regular trading to settle at $46.46.
Brent for August settlement climbed 43 cents to end the session at $48.72 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.05 to August WTI.
With production from shale fields rising, the decline of U.S. supplies will depend largely on fuel demand as Americans take to the roads for summer trips, and on reduced shipments from abroad. The U.S. oil rig count is at the highest level since April 2015, and the EIA sees output from major shale plays expanding to a record 5.48 million barrels a day in July.
Gasoline stockpiles also increased in the API report, the people said. In the Bloomberg survey for EIA numbers on Wednesday, they are forecast to have decreased by 1.15 million barrels last week. Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, declined by 1.4 million barrels last week, according to a forecast compiled by Bloomberg.
The Organization of Petroleum Exporting Countries said the group’s output climbed the most in six months in May.
- Oil stockpile draws will accelerate in the second half of 2017, according to BP Plc’s Chief Economist Spencer Dale.
- Energy Aspects Ltd. cut its 2017 Brent forecast to $56 a barrel from $59 previously, according to a note.
— With assistance by Ben Sharples, and Grant Smith