Oil down more than 3 percent on U.S. crude build; Brent near 2004 low

Wed Dec 30, 2015 3:25pm EST
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By Barani Krishnan

NEW YORK (Reuters) - Crude prices fell more than 3 percent on Wednesday, with Brent sliding toward 11-year lows, after an unusual build in U.S. stockpiles and signs Saudi Arabia will keep adding to the global oil glut.

Crude inventories in the United States, the world's largest petroleum producer, rose 2.6 million barrels last week, the U.S. Energy Information Administration said. Analysts polled by Reuters had expected a draw of 2.5 million barrels.

Stockpiles hit record highs at the Cushing, Oklahoma delivery hub for U.S. crude's West Texas Intermediate (WTI) futures. Gasoline and heating oil also posted larger-than-expected stock builds.

"In all the years I have been doing this, I have never seen builds in the last week of December," said Tariq Zahir, crude futures trader at Tyche Capital Advisors in Long Island, New York.

"At least for tax consequence reasons, refiners always ramp up runs at the year-end, and there's a draw. This is a first for me."

Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland, called it "just another bearish data point in a series of many that have dominated 2015 and will likely continue to do so heading into 2016".

Crude prices, however, did not lose much after their initial decline on the EIA data. Some attributed that to thin, holiday-season volumes. WTI's front-month contract traded just over 240 million barrels on Wednesday, about half of levels seen two weeks ago, Reuters data showed.

Crude prices began falling on Tuesday itself, retracing gains in post-settlement trade after preliminary inventory data from industry group American Petroleum Institute showed a build. EIA's data on Wednesday confirmed that.   Continued...

A worker checks steel pipes at an oil field preparing for oil and gas exploitation in Yilong, Sichuan province December 10, 2008. REUTERS/Stringer