Oil drops to nearly 6-month low after US crude, gasoline build-up surprise

Sticker reads crude oil on the side of a storage tank in the Permian Basin in Mentone, Loving County, Texas, US Nov. 22, 2019. REUTERS/Angus Mordant

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  • US crude, gasoline inventories rise unexpectedly – EIA
  • OPEC+ decides on small 100,000 bpd increase to output target
  • US had pushed for more meaningful supply increase
  • Iranian and US negotiators travel to Vienna for talks

HOUSTON, Aug. 3 (Reuters) – Oil prices fell about 4% to a six-month low on Wednesday after U.S. data showed crude and gasoline inventories rose unexpectedly last week and OPEC+ said it had surpassed its oil production target by 100,000. barrels per year would increase. day (bpd).

Brent oil futures fell $3.76, or 3.7%, at $96.78 a barrel. That was the lowest settlement since Feb. 21.

West Texas Intermediate (WTI) crude futures fell $3.76, or 4%, to $90.66, the lowest settlement since Feb. 10. The contract hit a session low of $90.38 a barrel, its weakest since Feb. 25.

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Both contracts flipped during the session.

The premium for first-month Brent futures versus six-month barrel loading is at a three-month low, signaling easing concerns about tight supply. The same WTI futures premium approached a four-month low.

US crude inventories rose unexpectedly last week as exports fell and refineries cut their runs, while gasoline inventories also grew surprisingly as demand declined, the Energy Information Administration said.

Crude inventories rose 4.5 million barrels last week, compared to analysts’ forecast for a draw of 600,000 barrels. Gasoline inventories rose 200,000 barrels, against expectations of a decline of 1.6 million barrels.‚Äč

“The crude oil count is well above expectations. Gasoline is a disappointment. You should never build up gasoline in the summer. It’s a very bearish report,” said Bob Yawger, director of energy futures at Mizuho.

The ministers of the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, known as OPEC+, agreed to the small increase in the group’s output target, equivalent to about 0.1% of global oil demand. read more

Although the United States has asked the group to increase production, spare capacity is limited and Saudi Arabia may be reluctant to ramp up production at the expense of Russia, which has been hit by sanctions over the conflict in Ukraine.

The Biden administration is focused on keeping oil prices low, the White House said.

Ahead of the meeting, OPEC+ lowered its forecast for the oil market surplus this year by 200,000 bpd to 800,000 bpd, three delegates told Reuters. read more

Weighing also on prices, Iranian and US officials said they were traveling to Vienna to resume indirect talks on Iran’s nuclear program, reviving virtually vanished hopes of lifting sanctions hampering Iran’s oil exports. blown in. read more

On the demand side, Federal Reserve officials on Wednesday reaffirmed their determination to contain high inflation, although it was said that a half a percentage point hike in the U.S. central bank’s key interest rate next month could be enough to make that happen. reach the goal. read more

The US dollar index, which tracks the greenback against six major competitors, also rose, depressing demand by making oil more expensive for holders of other currencies.

However, oil prices were aided by the Caspian Pipeline Consortium (CPC), which links Kazakh oil fields to Russia’s Black Sea port Novorossiisk, and said inventories had fallen significantly, without providing figures. read more

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Additional reporting by Laila Kearney and Stephanie Kelly in New York, Shadia Nasralla in London, Sonali Paul and Emily Chow; Editing by Marguerita Choy, David Goodman and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

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