Rising U.S. Oil Stocks Weigh on Prices

By Christopher Alessi Features Dow Jones Newswires

Oil prices edged down Thursday on rising U.S. petroleum inventories.

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Brent crude oil, the global benchmark, was down 0.3% at $61.72 a barrel in London midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.2% at $55.20 a barrel.

The U.S. Energy Information Administration on Wednesday released data showing that crude stockpiles climbed by 1.9 million barrels in the week ended Nov. 10, ahead of analysts' forecasts.

"The main health barometer of the global oil market is the OECD stock level, the biggest part of which is U.S. commercial stocks," according to Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd.

Mr. Varga noted that the EIA figures reinforced "bearish sentiment" in the market that was set in motion earlier in the week when the International Energy Agency released its monthly oil-market report. The agency lowered its global oil demand forecasts for this year and next, suggesting the oil price rally seen over the past months could be short-lived.

Oil prices have risen more than 20% since the start of September, with Brent holding steady over $60 a barrel for the first time in over two years.

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Oil market observers have cautioned that higher prices could incentivize U.S. shale oil producers to increase their output, which could slow the market rebalance and weigh on prices.

The EIA on Wednesday also said U.S. oil production rose to a record weekly high last week of 9.645 million barrels.

The agency's weekly U.S. production estimates "have now climbed above the monthly all-time high from April 2015, while implied production figures have been running above 10 million barrels a day for three weeks in a row," according to analysts at consultancy JBC Energy.

Analysts and investors are looking ahead to a meeting of the Organization of the Petroleum Exporting Countries in Vienna in two weeks. The cartel and other major producers including Russia are expected to extend an agreement to curb global production through next year. The deal, first agreed last year, has reined in global supply by roughly 2% and is set to expire in March.

Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was down 0.4% at $1.72 a gallon. ICE gasoil, a benchmark for diesel, changed hands at $555.75 a metric ton, down 0.2% from the previous settlement.

Write to Christopher Alessi at christopher.alessi@wsj.com

Oil prices edged lower Thursday as rising U.S. petroleum inventories and wavering demand forecasts continued to weigh on the market.

U.S. crude futures recently fell 4 cents, or 0.07%, to $55.29 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 9 cents, or 0.15%, to $61.78 a barrel on ICE Futures Europe.

The U.S. Energy Information Administration Wednesday released data showing that crude stockpiles climbed by 1.9 million barrels in the week ended Nov. 10, ahead of analysts' forecasts. That came on the heels the International Energy Agency's downward revision to its demand forecasts for this year and next, which sparked a selloff on Tuesday.

The two reports this week have helped stymie a rally that sent oil prices up some than 20% since the start of September.

But investors who piled into bullish positions on crude futures may be losing their appetite to keep buying.

"I think we've exhausted a technical run in the market," said Stephen Schork, editor of the energy trading newsletter The Schork Report. "We had a heck of a ride."

"The damage created from the IEA downbeat outlook for oil demand can still be seen in the commodity's price action, while Wednesday's EIA report has market players pondering over how OPEC deals with rising production of U.S. shale," analysts at brokerage FXTM wrote Thursday.

Oil market observers have cautioned that higher prices could incentivize U.S. shale oil producers to increase their output, which could slow the market rebalance and weigh on prices.

The EIA Wednesday also said U.S. oil production rose to a record weekly high last week of 9.645 million barrels.

The agency's weekly U.S. production estimates "have now climbed above the monthly all-time high from April 2015, while implied production figures have been running above 10 million barrels a day for three weeks in a row," according to analysts at consultancy JBC Energy.

Analysts and investors are looking ahead to a meeting of the Organization of the Petroleum Exporting Countries in Vienna in two weeks. The cartel and other major producers including Russia are expected to extend an agreement to curb global production through next year. The deal, first agreed last year, has reined in global supply by roughly 2% and is set to expire in March.

Gasoline futures fell 1.11 cents, or 0.64%, to $1.7277 a gallon. Diesel futures fell 0.19 cent, or 0.1%, to $1.9068 a gallon.

Write to Christopher Alessi at christopher.alessi@wsj.com and Alison Sider at alison.sider@wsj.com

(END) Dow Jones Newswires

November 16, 2017 11:09 ET (16:09 GMT)