Oil falls on surprise
build in U.S. crude stocks
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[August 24, 2016]
By Karolin Schaps
LONDON (Reuters) - Oil prices fell on
Wednesday on an unexpected increase in U.S. crude stocks that
revived worries about the supply glut that has capped prices for the
past two years.
Global benchmark Brent crude was down 52 cents, or one percent, at
$49.44 a barrel at 1010 GMT, after touching an intraday low of
U.S. West Texas Intermediate (WTI) crude was down 80 cents, or 1.7
percent, at $47.30 a barrel. Earlier in the session, the contract
came close to shedding a dollar at $47.13.
"API (data) showed a big build last week and that supported the
quick turnaround in sentiment," said Ole Hansen, Saxo Bank's head of
Industry data from the American Petroleum Institute (API) showed on
Tuesday that U.S. crude inventories had risen by 4.5 million barrels
in the week ending Aug. 19.
Analysts had expected a 455,000-barrel fall.
The U.S. government will publish its own weekly crude stocks data at
1430 GMT on Wednesday.
Brent briefly spiked above $50 in the previous session after Reuters
reported Iran was sending positive signals that the country may
support joint OPEC action to prop up oil prices.
But analysts and traders remain skeptical that producers will come
to an agreement at a meeting in Algeria scheduled for Sept. 26-28 as
various OPEC members have their own agendas.
"There is currently a race to print any freeze headlines but we have
not yet seen strong substance behind them," said Olivier Jakob,
managing director of PetroMatrix in Switzerland.
Iraq's prime minister said on Tuesday his country had not yet
reached its full oil market share, suggesting the government would
not restrain crude output as part of any OPEC agreement.
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Crude oil storage tanks are seen from above at the Cushing oil hub,
appearing to run out of space to contain a historic supply glut that
has hammered prices, in Cushing, Oklahoma, March 24, 2016.
"I really can't see the sense for Saudi, in particular, to actually
have some meaningful constraint on production because there is quite
a lot of capacity of U.S. shale to come on quite quickly," said Ric
Spooner, chief market analyst at CMC Markets.
He said he could see prices drifting closer to $45 a barrel over the
next few days.
China's state-controlled oil firm CNOOC said on Wednesday an oil
price recovery was facing "significant headwinds", as it reported
swinging to a loss in the first half of the year due to weak prices.
(Additional reporting by Mark Tay in Singapore; Editing by Dale
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