Oil drops on contradictory US stockpiles data

While API likely to state a 2.13m barrel drop, Bloomberg survey hints at a 2.5m barrel gain

Oil fell as traders weighed contradictory assessments of US crude inventories before the release of government data later yesterday.

The American Petroleum Institute was said to report a 2.13 million-barrel drop in stockpiles, while a Bloomberg survey forecast a 2.5 million-barrel gain.

West Texas Intermediate for November delivery traded down 40 cents at $71.52 a barrel on the New York Mercantile Exchange at 11:30am. Brent for December settlement slipped 26 cents to $81.15 a barrel on the London-based ICE Futures Europe exchange.

The global benchmark crude was at a $9.76 premium to WTI for the same month.

Crude has increased almost 20 per cent this year on concern that US sanctions on Iranian crude — as well as supply losses in Venezuela and elsewhere — will leave global markets stretched. While the Organisation of Petroleum Exporting Countries and its allies insist they’re committed to raising output, questions remain over their spare capacity. Meanwhile, geopolitical tensions continue to hound sentiment.

In the US, crude stockpiles at the storage hub of Cushing, Oklahoma, rose by 1.5 million barrels last week, according to the API.

That would be the fourth consecutive increase if confirmed by the Energy Information Administration’s data that was due later yesterday.