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 The American Petroleum Institute on Tuesday reported a rise in U.S.
commercial crude stocks of 7.1 million barrels to 473 million
barrels in the week to Oct. 16, trumping expectations for an
increase of 3.9 million barrels.
Rising supply from the largest-producing countries, along with
slowing demand from emerging nations, has cut the price of oil in
half over the last year.
With no sign that either trend will change any time soon, the oil
price is more likely to fall than rise, analysts said.
"The risk is on the downside," PVM Oil Associates analyst Tamas
Varga said. "It's an oversupplied market."
Brent crude for December was down 30 cents at $48.41 a barrel by
0950 GMT. U.S. crude futures for December delivery were down 65
cents to $45.64 a barrel.
Investors awaited official oil inventory figures from the U.S.
Energy Information Administration, due at 10:30 a.m. ET (1430 GMT)
to see if they confirmed the API data.
A Reuters poll of analysts forecast the EIA would report a build in
crude stocks for a fourth straight week. [EIA/S]
"We’ve seen inventories build for the last three weeks now, which
has helped ensure oil prices remain quite heavy," Oanda market
analyst Craig Erlam said in a note.
"Another build today, 3.5 million barrels expected, could add
further downside."
PVM's Varga said crude markets could see some short-covering as a
result of a sell-off that has brought Brent down from a high of
above $54 a barrel two weeks ago.
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Open interest in Brent futures has risen to 442,279 lots with the
rollover of the front-month contract into December, just a few
thousand contracts shy of April's record, which Varga said could
provide the market with a boost in the event of a larger price
slide.
"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.
Only five non-OPEC countries sent officials to a meeting of with
OPEC at its Vienna headquarters on Wednesday to discuss possible
market cooperation. The meeting was unlikely to agree any
coordination over supply, an OPEC delegate said.
(Additional reporting by Keith Wallis in Singapore and Christopher
Johnson in London; editing by Jason Neely)
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