Oil extends drop as US stockpiles rise

Futures lost 1.3% in New York after falling 1.9% on Tuesday as inventories gain by 6.51m barrels

Oil fell for a second day to trade near $55 a barrel as US industry data showed an unexpected jump in crude stockpiles.

Futures lost as much as 1.3 per cent in New York after falling 1.9 per cent on Tuesday. US inventories rose by 6.51 million barrels last week, the American Petroleum Institute was said to report. That would be the biggest gain since March.

Oil rose to a two-year high last week on signs of tightening supplies and a possible extension of output curbs by the Organisation of Petroleum Exporting Countries and its allies. Still, Opec has yet to convince Russia, one of its partners in the deal, that it’s necessary to prolong the agreement when the group meets in Vienna this month.

“The API data showed an inventory build, in contrast to expectations of a draw, which is weighing on the market,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “The Russian news doesn’t help either.”

West Texas Intermediate for December delivery slid as much as 72 cents to $54.98 a barrel on the New York Mercantile Exchange, and traded at $55.23 as of 9:30am. London time. Total volume traded was about 3.6 per cent below the 100-day average. Prices dropped $1.06 on Tuesday. December WTI options contracts expired yesterday.

Brent for January settlement fell as much as 90 cents, or 1.5 per cent, to $61.31 a barrel on the London-based ICE Futures Europe exchange, after dropping 1.5 per cent on Tuesday. The global benchmark was at a premium of $6.26 to January WTI.

Gasoline inventories rose by 2.4 million barrels last week, the API said on Tuesday.