Oil eases on US inventory, market looks to EIA data

SINGAPORE: Oil edged lower on Wednesday as expectations of an increase in US inventories weighed on the market, offsetting bullish momentum from output cuts announced by Opec and other producers.

Brent crude , the international benchmark for oil prices, dropped 24 cents, or 0.4 per cent, to $55.20 a barrel by 0740 GMT. US West Texas Intermediate (WTI) crude lost 23 cents, or 0.4 per cent, to trade at $52.95 a barrel.

Weekly inventory data from the American Petroleum Institute showed US crude, gasoline and diesel stocks all rose last week. The Energy Information Administration will report its data at 1530 GMT.

Analysts estimated US crude stocks increased by about 2.8m barrels in the week to January 20.

“The market will focus on tonight’s EIA data, which is the most likely market moving event in the next 24 hours,” said Michael McCarthy, chief market strategist at Sydney’s CMC Markets.

“I am seeing estimates here of a build of 2.5 million barrels. But there is a wide spread (in estimates) which is a reason to think tonight’s data could be market moving.”

US oil production has risen by more than 6 per cent since mid2016, though it remains 7 per cent below the 2015 peak. It is back to levels reached in late 2014, when strong US crude output contributed to a crash in oil prices.