Despite data on Wednesday showing a huge build in USA crude inventories, oil rallied early in New York trade as investors regained their appetite for risk due to a respite in bad news out of China and the potential for more European monetary easing.
USA crude oil shares rose by four.67 million barrels to 455.43 million barrels within the week to August. 28, the Power Info Administration (EIA) stated on Wednesday.
While traders said early signs of falling US oil production had been supportive for prices, the problems that took out BP’s 165,000-barrels-per-day Whiting, Indiana refinery raised concerns that the USA oil storage hub at Cushing, Oklahoma could fill.
Oil prices fell almost 3% in Asian trade on Tuesday, with investors covering short positions and taking profits after Brent and U.S. crude soared more than 8% in the previous session.
Nonetheless, the USA government on Monday released new domestic oil production data for the first half of 2015 which showed output was as much as 130,000 bpd lower than first estimated, potentially lending prices some support. Brent crude dropped by nearly 5.4% to $51 a barrel while WTI dropped to 46.49%.
“Even with the EIA revision, we’re still producing over 9 million barrels per day, so I’m not convinced we’ve seen the fundamental shift to justify the rally”, said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut. “Crude oil imports rebounded markedly and refinery utilisation fell again, allowing for the substantial crude oil inventory rise”. The oil market is one of the most volatile in all of the sectors, because there are really high highs and really low lows through the week.
Inventories rose by 7.6 million barrels through August. 28, the industry-funded American Petroleum Institute was said to have reported Tuesday.
In London, Brent North Sea crude for October closed at $US49.56 a barrel, down $US4.59, or 8.5 per cent, from Monday’s settlement.
Crude oil and gasoline stocks were expected to have fallen last week, according to Reuters survey of analysts.
Distillate: Distillate fuel supplies (including diesel and heating oil) edged up 115,000 barrels last week, significantly lower than analysts’ expectations for a 700,000 barrels rise in inventory level.