Oil prices waver as disappointing U.S. inventory data fuel oversupply concerns
London (Aiug 25) Crude prices edged higher but struggled for clear direction on Thursday as the surprise build in U.S. crude inventories last week disappointed investors and renewed concerns about the oversupplied oil market.
U.S. commercial stockpiles of crude oil and refined products increased by 6.6 million barrels in the week ended Aug. 19 to a record 1.4 billion barrels, the Energy Information Administration said, an indication that the global glut of crude that has weighed on prices for two years has yet to fully shrink.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in October CLV6, -0.36% inched up 1 cent, or about 0.2%, to $46.86 a barrel but have traded both higher and lower. October Brent crude on London’s ICE Futures exchange LCOV6, -0.29% recovered earlier declines to trade up 4 cents, or 0.1%, to $49.10 a barrel.
“The highlight of this report was the bearish and unexpected build in crude,” said Michael Wittner, the chief commodities analyst at Société Générale, in a note.
Crude-oil stockpiles rose by 2.5 million barrels in the latest week. Analysts surveyed by The Wall Street Journal had expected crude supplies to have fallen slightly in the week.
Analysts say strong imports — an increase of 449,000 barrels per day from last week — and slower refining activities were the main drivers behind the increase. At 523.5 million barrels, U.S. crude inventories are at historically high levels for this time of the year, the EIA said.
“Brent also came under pressure after Iraq said it still isn’t producing as much as it should be, raising concerns that the Organization of the Petroleum Exporting Countries will continue to increase,” said ANZ Research.
The U.S. Navy released footage showing four Iranian military vessels approaching a U.S. destroyer at high speed in international waters near the Persian Gulf.
Iraq’s new oil minister Jabbar al-Luaybi in a meeting with international oil companies on Tuesday expressed the country’s support for these foreign players to “raise the levels of production and exportation,” according to a statement on the Iraq’s oil ministry website.
“We observed some of the problems and challenges which are facing the foreign oil companies, and we will work to solve them in order to develop the work and raise the production of oil and gas in order to raise the national outcome,” the minister said in the statement.
As OPEC’s second largest producer, Iraq pumped out 4.32 million barrels a day in July, according to the group’s latest oil report.
Iraq’s intention to raise output is one of many potential upside risks that the market is monitoring as Nigeria and Libya, whose production and exports were stunted by militant attacks in recent months, are also gearing to ramp up their output.
Read: Not even OPEC can save the struggling oil market now, Goldman Sachs warns
Energy investors will be paying attention to the Jackson Hole symposium which begins later today and is being attended by Federal Reserve Chairwoman Janet Yellen.
“The market hopes [she] would offer clarity on Federal Reserve monetary policy stance,” said Barnabas Gan, an economist at OCBC.
Read: Fed might hike interest rates despite market objections
Nymex reformulated gasoline blendstock for September RBU6, -1.71% — the benchmark gasoline contract — fell 1.1% to $1.49 a gallon, while natural gas for the same month NGU16, +0.36% dropped 0.1% to $2.79 per million British thermal units.