US oil falls by 2 percent after big US crude stock builds

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LONDON: US oil prices fell more than 2 percent on Wednesday on an unexpected increase in US crude stocks that revived worries about the supply glut that has capped prices for the past two years.

Industry data from the American Petroleum Institute (API) showed on Tuesday that US crude inventories had risen by 4.5 million barrels in the week ending Aug. 19. Analysts had expected a 455,000-barrel fall.

This pushed US West Texas Intermediate (WTI) crude CLc1 down more than $1, erasing gains made in the previous session. WTI was down $1.03, at $47.07 a barrel .

Global benchmark Brent crude LCOc1 was down 69 cents at $49.27 a barrel after touching an intraday low of $49.07.

According to Saxo Bank’s head of commodities research, Ole Hansen, “API (data) showed a big build last week and that supported the quick turnaround in sentiment. The US government will publish its own weekly crude stocks data at 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 sceptical 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.

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.

Chief market analyst at CMC Markets Ric Spooner said that 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 US shale to come on quite quickly.

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.

Source: AFP

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