Oil falls 3%, affected by sudden pressure from US crude and gasoline

A poster with crude oil written on the side of a storage tank in the Permian Basin in Menton, Loving County, Texas, United States, November 22, 2019. REUTERS/Angus Mordant

HOUSTON (Reuters) – Oil prices fell 3 percent on Wednesday, with losses accelerating after US data showed crude and gasoline stocks rose unexpectedly last week after OPEC+ said it would raise its oil production target by just 100,000 barrels per day. .

Brent crude futures were down $2.90, or 2.9%, at $97.61 a barrel by 12:17 PM ET (1617 GMT). West Texas Intermediate crude futures fell $2.93, or 3.1 percent, to $91.49. Both decades have swung in the past.

The premium for Brent crude futures next month to loading barrels within six months has reached its lowest level in three months, indicating a waning concern about a supply shortage. The same premium for West Texas Intermediate crude futures is close to a four-month low.

The Energy Information Administration said that US crude oil stocks rose unexpectedly last week as exports fell and refineries cut inflows, while gasoline stocks also recorded a surprise increase as demand slowed.

Crude stocks rose 4.5 million barrels last week, compared to analyst expectations for a draw of 600,000 barrels. Gasoline stocks rose 200,000 barrels, versus expectations for a 1.6 million barrel decline.

“Crude oil numbers are much higher than expected. Gasoline is disappointing. You should never see an increase in gasoline over the summer. It’s a very bearish report,” said Bob Yuger, director of energy futures at Mizuho Bob Yuger.

Ministers of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, agreed to slightly increase the group’s production target, equal to about 0.1% of global oil demand. Read more

Algerian Energy Minister Mohamed Arkab told state television that Algeria’s oil production in September will rise to 1.57 million barrels per day.

While the United States has asked the group to increase production, spare capacity is limited and Saudi Arabia may be reluctant to increase production at the expense of Russia, which has been hit by sanctions over the conflict in Ukraine.

Three delegates told Reuters that before the meeting, OPEC + cut its forecast for the oil market surplus this year by 200,000 barrels per day to 800,000 barrels per day. Read more

Also weighing on prices, Iranian and US officials said they were traveling to Vienna to resume indirect talks on Iran’s nuclear programme, reviving dashed hopes that sanctions crippling Iran’s oil exports would be lifted. Read more

Prices were also affected when San Francisco Fed President Mary Daly warned of a 75 basis point rate hike if inflation persists. Richmond Fed President Thomas Barkin also said the Fed is committed to controlling inflation and bringing it back to the US central bank’s 2% target.

The US dollar index, which measures the greenback against six major peers, also rose, squeezing demand by making oil more expensive for holders of other currencies.

Additional reporting by Laila Kearney in New York, Shadia Nasrallah in London, Sonali Paul and Emily Chow. Editing by Margarita Choi, David Goodman and David Gregorio

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