Oil seesaws; struggles to extend rally after U.S. crude build
Reuters
Published Oct 07, 2015 12:49PM ET
Oil seesaws; struggles to extend rally after U.S. crude build
By Barani Krishnan
NEW YORK (Reuters) - Oil prices seesawed in volatile trading on Wednesday, barely hanging onto a third day of gains after government data showing a large U.S. crude inventory build surprised traders the morning after an industry group had reported a draw.
The U.S. Energy Information Administration (EIA) said domestic crude inventories rose 3.1 million barrels last week, more than the 2.2 million-barrel build that analysts had forecast in a Reuters survey.
Just on Tuesday preliminary inventory data by the American Petroleum Institute had suggested a drawdown of 1.2 million barrels. Oil prices slid after the EIA report.
Brent, the global crude benchmark, was up 25 cents at $52.17 a barrel by 12:22 p.m. EDT (1622 GMT). At its session high, Brent was up more than $1, and then it turned negative before edging slightly higher.
The West Texas Intermediate (WTI) benchmark for U.S. crude was down 5 cents to $48.48 a barrel. It had also been up more than $1 at its session high.
Between Friday and Tuesday, Brent and U.S. crude prices had rallied about $4 each, breaking above a month-long trading range on technical buying and supportive data.
The crude build "will take some of the wind out of the market's sails", said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.
"The report is bearish enough to break the back of the rally," he said. It's cold water on the market."
Tariq Zahir, trader in crude oil spreads at Tyche Capital Advisors in Laurel Hollow in New York, agreed.
"Overall, we have a real battle going on, with crude technically having broken out of the range we have been in for more than a month. $50 for WTI is in sight," Zahir said. "But fundamentally we are seeing builds and that should continue we feel in the weeks to come."
He cited the impending arrival of Iranian oil as nuclear-related sanctions against Tehran come off, and an Atlantic hurricane season that has so far done no damage to U.S. oil installations.
On Tuesday, a monthly report by the EIA projected that global oil demand for 2016 will grow by the fastest rate in six years, suggesting a crude surplus was easing more quickly than expected.
Robin Bieber, director of London brokerage PVM Oil Associates, said the overall trend for oil prices would still be higher.
Get The News You Want
"The key technical indicators are positive," Bieber said. "It is not advised to be short."
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.