Oil ends down but off lows, then slides on API report
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A view of an oil refinery off the coast of Singapore, March 14, 2008. REUTERS/Vivek Prakash/File Photo
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By Barani Krishnan
NEW YORK (Reuters) - Oil prices settled lower on Tuesday, then tumbled again after hours following a trade group's report of a U.S. crude inventory build nine times larger than forecast.
During regular trading hours, crude prices hit one-month lows before paring losses at settlement. Then the American Petroleum Institute (API) said crude stockpiles swelled 9.3 million barrels in the week to Oct. 28. Analysts polled by Reuters had forecast a build of 1 million barrels.
API's report came ahead of official inventory data by the U.S. government's Energy Information Administration (EIA), which is considered more reliable.
The API bases its numbers on voluntary reporting by members, while the EIA uses a bigger sample. If the government data confirms the large build, traders said crude prices could plummet.
U.S. West Texas Intermediate (WTI) crude
"We'll easily be looking at $45 WTI if the EIA report shows a build as terrifying as this," said Phil Davis, crude oil trader at PSW Investments in Woodland Park, New Jersey.
The last time WTI traded at around $45 or below was on Sept. 27, before the Organization of the Petroleum Exporting Countries announced its first planned production cut in eight years to reduce a global oil glut.
In the weeks that followed, Brent hit one-year highs of $53.73 and WTI 15-month peaks of $51.93 as OPEC kingpin Saudi Arabia talked up the plan, inviting non-member producers such as Russia to make cuts too.
Prices began falling again as more OPEC members said they were unwilling or unable to cut production, casting doubt on what the group will do when it meets on Nov. 30 in Vienna. An OPEC official document on Monday, indicating the group was making progress on the plan, did little to convince traders.
"It looks like we will break down more momentously unless the Saudis intervene with big output cuts of their own," said David Thompson, executive vice-president at Powerhouse, a commodities-focused broker in Washington.
Crude prices rose in early trade as the U.S. dollar slid, <.DXY> making greenback-denominated oil cheaper for users of other currencies. [FRX/] Crude was also supported by an early gasoline rally after Colonial Pipeline Co [COLPI.UL] shut its main gasoline pipeline following an explosion in Alabama.
(Additional reporting by Amanda Cooper in LONDON and Aaron Sheldrick in TOKYO; Editing by Marguerita Choy and David Gregorio)
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