Category: Commodities
West Texas Intermediate oil futures fell back towards the $30-level in Europe trade on Wednesday, amid speculation weekly supply data due later in the session will show U.S. crude inventories rose at a faster pace than expected last week.The U.S. Energy Information Administration will release its weekly report on oil supplies at 15:30GMT, or 10:30AM ET, amid expectations for a gain of 3.3 million barrels.After markets closed Tuesday, the American Petroleum Institute, an industry group, surprised market participants and said that U.S. oil inventories jumped by 11.4 million barrels in the week ended January 22, compared to expectations for an increase of 3.5 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub for WTI fell by 664,000 barrels, the API said.Crude oil for delivery in March on the New York Mercantile Exchange shed 73 cents, or 2.34%, to $30.71 a barrel by 08:00GMT, or 3:00AM ET.A day earlier, Nymex prices jumped $1.11, or 3.66%, as traders covered short positions amid speculation OPEC and non-OPEC producers may be edging closer to a deal to cut production in an effort to stem the persistent slump in oil prices.U.S. oil futures plunged below $27 last week for the first time since September 2003, as ongoing concerns over a global supply glut and slowing demand dragged down prices. The U.S. benchmark is down nearly 17% this month amid ongoing concerns over a global supply glut.Elsewhere, on the ICE Futures Exchange in London, Brent oil for March delivery retreated 66 cents, or 2.08%, to $31.14 a barrel. The more actively-traded April contract declined 57 cents, or 1.77%, to $32.00.On Tuesday, London-traded Brent prices rallied $1.30, or 4.26%, after Iraq's oil minister said he saw some flexibility for a deal between OPEC and non-OPEC.Futures sank to $27.10 on January 20, a level not seen since October 2003. Brent is down almost 15% since the start of the year as lingering concerns over China’s economic outlook added to the view that a global supply glut may stick around for much longer than anticipated.China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by the Organization of the Petroleum Exporting Countries last year not to cut production in order to defend market share.Oversupply issue will be exacerbated further as Iran plans to return to the global oil market after western-imposed sanctions were lifted earlier this month. Analysts say the country could quickly ramp up exports by around 500,000 barrels.The surge in Iranian shipments is viewed as bearish for crude, which has fallen approximately 75% from its peak of $115 two summers ago, amid a glut of oversupply on markets worldwide.Most market analysts expect a global glut to worsen in the coming months due to soaring production in North America, Saudi Arabia and Russia.Meanwhile, Brent's premium to the West Texas Intermediate crude contract stood at 43 cents, compared to a premium of 35 cents by close of trade Tuesday.
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