Oil Falls on Bearish US Inventory Data
28 June 2017 - 5:10AM
Dow Jones News
By Jenny W. Hsu
Crude futures faced selling pressure in Asia on Wednesday, after
industry group American Petroleum Institute said U.S. crude
stockpiles ticked higher last week, contrary to general market
expectations.
Many analysts say the crude stockpiles should show a decline for
last week because heavy downpours in the Gulf of Mexico likely
stunted oil operations there for several days. However, the API
data showed crude inventories increasing 800,000 barrels.
A WSJ survey of 10 analysts and traders tipped for a decline of
2.4 million barrel in crude inventories. Meanwhile, a report on
crude inventories from the Energy Information Administration is due
later Wednesday.
"The storm made landfall on June 22 and the [API] inventory
snapshot was as of June 23, so there may be an element of reporting
lag that could push the impact of the storm into next week's
report," said Tim Evans, a Citi Futures analyst.
Oil prices rose around 2% overnight after reports of massive
cyberattacks on global businesses impacting shipping giant A.P.
Moeller-Maersk A/S and Russia oil producer PAO Rosneft. But the
gains quickly fizzled out.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in August traded at $44.11 a barrel at 0236 GMT, down
$0.13 in the Globex electronic session. August Brent crude on
London's ICE Futures exchange fell $0.03 to $46.62 a barrel. Both
benchmarks are down nearly 18% since the start of the year.
Production data and exploration plans are closely scrutinized,
as the market remains well-bloated and prices under heavy pressure.
In the U.S., energy secretary Rick Perry this week touted an
acceleration of U.S. oil output and exports as part of the Trump
administration's agenda to make U.S. energy independent.
He said permits to explore and drill "withered on the vine"
under the previous administration, noting that "those days are
over."
His comments were taken negatively by some market participants,
who say that rapidly increasing U.S. production at a time of
stubborn oversupply will end up hurting shale producers.
"There is a danger to this kind of talk since many U.S.
producers lose money if oil dips below $40," said Michael McCarthy,
an analyst at CMC Markets.
If U.S. speeds up output, it could encourage oil producers like
those in the Organization of the Petroleum Exporting Countries and
Russia to turn their spigots wider, some argue.
As a way to tackle the three-year long glut, OPEC and Russia
agreed on a 15-month production cut that started in January. So
far, the effects of the cuts have been largely offset by output
from the U.S.
Refined products were broadly down. Nymex reformulated gasoline
blendstock was down 0.6% at $1.45 a gallon, while July diesel
slipped 0.3% at $1.41. July ICE gasoil down 0.1% to $422.75 a
metric ton.
Write to Jenny W. Hsu at jenny.hsu@wsj.com
(END) Dow Jones Newswires
June 27, 2017 23:55 ET (03:55 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.