Oil falls on surprise build in U.S. crude stocks
Oil prices fell on Wednesday on an unexpected increase in U.S. crude stocks that revived worries about the supply glut that has capped prices for the past two years. Global benchmark Brent crude LCOc1 was down 52 cents, or one percent, at $49.44 a barrel at 1010 GMT, after touching an intraday low of $49.07. U.S. West Texas Intermediate (WTI) crude CLc1 was down 80 cents, or 1.7 percent, at $47.30 a barrel. Earlier in the session, the contract came close to shedding a dollar at $47.13.
"API (data) showed a big build last week and that supported the quick turnaround in sentiment," said Ole Hansen, Saxo Bank's head of commodities research. Industry data from the American Petroleum Institute (API) showed on Tuesday that U.S. crude inventories had risen by 4.5 million barrels in the week ending Aug. 19.
Analysts had expected a 455,000-barrel fall. The U.S. government will publish its own weekly crude stocks data at 1430 GMT 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 skeptical 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.
"There is currently a race to print any freeze headlines but we have not yet seen strong substance behind them," said Olivier Jakob, managing director of PetroMatrix in Switzerland.
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.
"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 U.S. shale to come on quite quickly," said Ric Spooner, chief market analyst at CMC Markets. 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.