BLBG: Oil Retreats After OPEC Deal Rally on Reported U.S. Supply Gain
U.S. crude inventories increased by 4.68 million barrels: API
Market to swing to deficit in first half of 2017 on cuts: IEA
Oil retreated from the highest close since July 2015 as focus shifted to expanding U.S. crude stockpiles after OPEC and other producing nations agreed to cut output to stabilize the market.
Futures slid as much as 2 percent in New York after climbing 6.5 percent over the previous four sessions. U.S. inventories rose by 4.68 million barrels last week, the industry-funded American Petroleum Institute was said to report. Oil markets will swing into deficit in the first half of 2017, sooner than previously forecast, as producers curb supply, according to the International Energy Agency.
Oil has gained about 15 percent since the members of the Organization of Petroleum Exporting Countries agreed Nov. 30 to trim output for the first time in eight years. A deal reached over the weekend in Vienna to secure supply cuts from 11 non-OPEC producers including Russia means the agreement encompasses countries that produce about 60 percent of the world’s crude. U.S. supplies are at the highest seasonal level in more than three decades, weekly government data show.
“The weekly oil stocks data from the American Petroleum Institute showed a whopping build,” said Michael Poulsen, an analyst at Global Risk Management Ltd. “The recent oil price increase could trigger additional U.S. shale output as opening the taps becomes profitable again on higher prices.”
West Texas Intermediate for January delivery lost as much as $1.05 to $51.93 a barrel on the New York Mercantile Exchange, and was at $52.02 at 1:25 p.m. London time. The contract gained 15 cents to close at $52.98 on Tuesday. Total volume traded was about 12 percent below the 100-day average.
U.S. Stockpiles
Brent for February settlement fell as much as 96 cents, or 1.7 percent, to $54.76 a barrel on the London-based ICE Futures Europe exchange. The contract rose 3 cents to $55.72 a barrel on Tuesday, the highest settlement since July 2015. The global benchmark crude traded at a premium of $1.90 to WTI.
See also: Saudi Arabia said to tie output cuts to January volume requests
U.S. gasoline stockpiles increased by 3.91 million barrels last week, the API reported Tuesday, according to a person familiar with the figures. Nationwide crude inventories are forecast to have decreased by 1.5 million barrels, according to the median estimate in a Bloomberg survey before an Energy Information Administration report Wednesday.
Oil-market news:
OPEC said its agreement to cut production, while speeding up the re-balancing of the global oil market, won’t result in demand exceeding supply until the second half of next year.
The oil market has started to recover and the process will take some more months, Saudi Arabian Oil Minister Khalid Al-Falih told reporters in Dhahran.
Russian companies including Gazprom PJSC signed a raft of initial agreements with Iran that could lead to contracts worth billions of dollars after the easing of sanctions on the Persian Gulf nation.
Kuwait will provide its full January oil supplies to at least two Asian buyers, according to customers of the OPEC producer.
