NEW YORK (Reuters) - Oil settled down on Tuesday, then U.S. crude slid further below $50 a barrel in post-settlement trade after an industry group reported that U.S. oil inventories grew nearly three times as much as forecast.
The American Petroleum Institute (API) reported that U.S. crude stocks rose by 4.8 million barrels in the week ended Oct. 21 versus a 1.7-million barrel build forecast by analysts polled by Reuters. [API/S]
The U.S. Energy Information Administration (EIA) reports official inventory numbers on Wednesday. Last week, the EIA surprised the market, reporting an unexpected drawdown of 5.2 million barrels for the Oct. 14 week as a storm delayed shipments of imported oil. [EIA/S]
“Basically, the glut continues and demand is not coming back,” Phil Davis, a trader at PSW Investments in Woodland Park, New Jersey, said, referring to the API data.
“I don’t want to read too much into it but the fact of the matter is it certainly doesn’t support $50 oil.”
U.S. West Texas Intermediate (WTI) crude settled down 56 cents, or 1.1 percent, at $49.96. After the API report, it fell as much as $1.25, or 2.5 percent, to $49.27.
Brent, the international benchmark for crude, settled down 67 cents, or 1.3 percent, at $50.79. In post-settlement trade, it sank as much as $1.24, or 2.4 percent, to $50.22.
Oil prices were also depressed by producers’ verbal jockeying over planned output cuts by the Organization of the Petroleum Exporting Countries. Iraq, OPEC’s second largest producer, reiterated on Wednesday its resistance to contributing to the cuts while data showed it had higher output for October.
Some technical analysts pegged WTI’s next support at $49.15, its bottom on Oct. 10 before it rallied to a 15-month high of $51.93 on Oct. 19.
“If we snap that, in very short order we could be back down to $47,” said David Thompson, technical analyst and executive vice-president at commodities-focused broker Powerhouse in Washington.
Before this week, oil prices had surged about 13 percent in three weeks since OPEC announced on Sept. 27 its first planned output cut in eight years to combat the steep slump in crude prices from 2014 highs above $100 a barrel.
The production curbs are expected be finalized at OPEC’s policy meeting in Vienna on Nov. 30. The group has been holding talks with members and outside producers led by Russia for weeks now to try and sustain the market’s interest in its plan.
Additional reporting by Barani Krishnan in New York and Sabina Zawadzki in London; Editing by David Goodman and David Gregorio