US oil falls af­ter big jump in stock­piles

The Pak Banker - - MARKETS/SPORTS -

Oil prices fell in Asian trad­ing on Thurs­day, adding to a slump in the pre­vi­ous ses­sion, af­ter U.S. stock­piles rose for the sixth week to an­other record, sap­ping the strength of a two-month rally in prices. US crude futures CLc1 were down 55 cents at $39.24 a bar­rel at 0757 GMT, trad­ing fur­ther be­low the im­por­tant $40 level.

It closed down $1.66, or 4 per­cent, at $39.79 a bar­rel on Wed­nes­day. That marked the sharpest one-day drop for the front-month con­tract in U.S. crude since Feb. 11. Brent crude futures LCOc1 were down 36 cents at $40.11 a bar­rel. They fin­ished the last ses­sion down $1.32, or 3.2 per­cent, at $40.47 a bar­rel.

Ear­lier this week, both bench­marks had risen by more than 50 per­cent from multi-year lows that were hit in Jan­uary.

The U. S. gov­ern­ment's En­ergy In­for­ma­tion Ad­min­is­tra­tion (EIA) said crude stock­piles climbed by 9.4 mil­lion bar­rels last week - three times the 3.1 mil­lion bar­rels build forecast by an­a­lysts in a poll.

The con­tin­ued rise in stock­piles is grind­ing away at the gains in prices that were largely driven by plans of ma­jor pro­duc­ers, in­clud­ing Saudi Ara­bia and Rus­sia, to freeze pro­duc­tion. "OPEC pro­duc­tion is still high and Iran is ex­pected to con­tinue to ramp up," said Tony Nu­nan, oil risk man­ager at Mit­subishi Corp in Tokyo

"I ex­pect crude to come back down again and test the $35 level again if we con­tinue to get builds," he said.

The deal among a few OPEC pro­duc­ers and Rus­sia to freeze pro­duc­tion is per­haps "mean­ing­less" as Saudi Ara­bia is the only coun­try with the abil­ity to in­crease out­put, a se­nior ex­ec­u­tive from the In­ter­na­tional En­ergy Agency said on Wed­nes­day.

Though, Nige­ria be­lieves a deal is pos­si­ble, its Petroleum Min­is­ter Em­manuel Ibe Kachikwu said on Wed­nes­day. Things could get worse for oil bulls, with trad­ing houses bet­ting on oil mar­kets be­ing over sup­plied for at least two more years and look­ing to ex­tend or lock in new leases on stor­age tanks.

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