Oil tumbles on U.S. inventory builds; best month since April
- Top 10 News for 12/2: Crude Rips on OPEC Cut; Starbucks' Schultz Steps Down; Nonfarm Payrolls Flat in Nov.
- Unemployment Rate Drops to 4.6%
- Bond yields slip on U.S. jobs data, euro steady before Italy vote
- Alibaba (BABA) Founder Jack Ma Discuss Plans to Retire; 'I Don't Want to Die at the Office'
- Starbucks Coffee (SBUX) CEO Howard Schultz to Step Down, Appointed Executive Chairman; Kevin Johnson New CEO
Traffic passes a BP gas station on the North Circular Road in London, Britain January 28, 2016. REUTERS/Neil Hall
Get the Pulse of the Market with StreetInsider.com's Pulse Picks. Get your Free Trial here.
By Barani Krishnan
NEW YORK (Reuters) - Oil prices fell 3 percent or more on Wednesday, paring their big gains for August, after government data showed a large surprise weekly build in U.S. crude and distillate stockpiles and a smaller-than-expected drawdown in gasoline.
Crude futures rose as much 11 percent in August, posting their best monthly return since April, helped by speculation that the Organization of the Petroleum Exporting Countries and other oil producers might agree to curb output at September talks in Algeria.
But oil also fell this week as the dollar rallied and expectations for an OPEC-led production freeze fizzled. Wednesday's supply-demand data from U.S. Energy Information Administration (EIA) could herald a more bearish trend, analysts said.
The EIA said crude stockpiles rose for a second straight week, building by 2.3 million barrels last week, compared with analysts' expectations for a rise of 921,000 barrels.
Distillate stocks, which include diesel and heating oil, unexpectedly rose 1.5 million barrels, while the gasoline inventory drop of 691,000 barrels was about half the drawdown forecast. [EIA/S]
"I would call this the trifecta of bearish news," said Tariq Zahir, a trader in WTI timespreads at Tyche Capital Advisors in New York.
"We should be getting draws for this time of year. Not only are we getting shocking builds, we're also being squeezed by the bullishness of the U.S. dollar and a hurricane season that's had very little impact thus far on actual crude production."
Brent crude futures settled down $1.33, or 2.8 percent, at $47.04 per barrel. It rose nearly 11 percent for August.
U.S. crude's West Texas Intermediate (WTI) futures fell $1.65, or 3.6 percent, to close at $44.70. It gained more than 7 percent for the month.
"We had a short on WTI this morning at $46 and we took the money and ran," said Phil Davis, trader at PSW Investments in Woodland Park, New Jersey.
The market has paid little heed so far to risks of storm damage to oil and gas installations in the U.S. Gulf of Mexico. The U.S. government said on Wednesday that an estimated 19.5 percent of crude equivalent production in the Gulf had been shut due to a tropical depression.
Traders expect further pressure on oil if the U.S. jobs data for August, due on Friday, show sharp employment gains that could bump up the dollar , which hit three-week highs on Wednesday. [FRX/]
"It’s a one-way trip, and that is down" for oil, Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas, told the Reuters Global Oil Forum, predicting sub-$40 levels in the next two weeks.
(Additional reporting by Libby George in LONDON and Mark Tay and Henning Gloystein in SINGAPORE; Editing by Marguerita Choy and Nick Zieminski)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- UPDATE: Fed Says U.S. Economy Continued to Expand Across Most Regions - Beige Book
- Britain may continue with some EU cooperation post-Brexit: Johnson
- OPEC confirms production cut to 32.5 million barrels per day - Bloomberg
Create E-mail Alert Related CategoriesCommodities, Reuters
Related EntitiesCrude Oil, OPEC
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!