Oil falls 4 percent; U.S. crude draw seen as glitch

Fri Sep 9, 2016 3:34pm EDT
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By Scott DiSavino

NEW YORK (Reuters) - Oil prices fell 4 percent on Friday, paring most of the previous session's rise as traders noted that a tropical storm was behind this week's unexpected slump in U.S. crude inventories.

The market ended up around 3 percent, its first gain in three weeks. Traders cited hopes for a global deal on stabilizing crude output after Saudi Arabia, the leading oil producer inside OPEC, and Russia, the biggest producer outside the group, agreed on Monday to cooperate in oversupplied markets.

Brent crude LCOc1 settled down $1.98 at $48.01 a barrel after rising above $50 for the first time in two weeks on Thursday. U.S. crude CLc1 was down $1.74 at $45.88.

Oil prices shot up on Thursday after U.S. government data showed the biggest weekly drop in stockpiles last week since January 1999 as Gulf Coast imports slumped to the lowest on record. <EIA/S> Traders said imports fell as ships delayed offloading cargoes due to Tropical Storm Hermine.

"Most of yesterday's increase was on a false reading on a drop in crude oil stocks. But a closer look showed that it was mostly due to the storm delaying imports," said James Williams, president of energy consultant WTRG Economics in Arkansas.

"Next week, we're going to see a tremendous increase in oil stocks because of all the oil that did not come in last week because of Hermine," Williams said.

U.S. drillers this week added oil rigs for a 10th week in the past 11, according to the closely followed Baker Hughes rig count report on Friday. It was the longest streak without rig cuts since 2011.

Greenback-denominated oil was under pressure after the dollar index .DXY rose on concerns over the health of the EU economy and on remarks by Federal Reserve policymakers helped boost investor expectations of a near-term increase in U.S. interest rates. [USD/]   Continued...

Oil pump jacks are seen next to a strawberry field in Oxnard, California February 24, 2015. REUTERS/Lucy Nicholson