Oil falls as high stocks outweigh talk of output freeze
US crude oil stocks increased by 2.3 million barrels to 525.9 million barrels in the week to Aug. 26, data from the Department of Energy’s Energy Information Administration showed. Analysts had forecast an increase of 921,000 barrels. [EIA/S]
“The high U.S. inventory data suggest oversupply will remain for longer than expected,” said Hans van Cleef, senior energy economist at ABN AMRO Bank N.V. in Amsterdam.
“On top of that, anticipation of a higher dollar if the Fed starts to hike rates is negative for oil prices. And there’s also uncertainty about the likelihood of OPEC/non-OPEC action at the end of the month.”
Brent crude for November was down 40 cents at $46.49 a barrel by 1255 GMT after settling $1.84 lower at Wednesday’s close. U.S. crude was 35 cents lower at $44.35 a barrel, after falling $1.65 in the previous session.
Brent rose almost $10 a barrel through early August to a high above $51 two weeks ago on expectations that the world’s biggest oil producers would take some action to prop up oil prices weighed down by global oversupply.
Members of the Organization of the Petroleum Exporting Countries are due to meet in Algeria on the sidelines of the International Energy Forum (IEF) on Sept. 26-28, and are expected to discuss a deal to freeze global output.
Russia is also expected to attend the IEF.
But many investors doubt OPEC will be able to agree a common position on production and prices have fallen in recent days. Many past efforts to restrict production have failed and OPEC is responsible for only around 40 percent of world output.
“There is still lots of correction potential, given the overhang of speculative long positions and exaggerated hopes for an output freeze,” said Commerzbank oil analyst Carsten Fritsch.
Saudi Foreign Minister Adel al-Jubeir said on Thursday OPEC and non-OPEC oil producers were moving towards a common position on production, suggesting talks in Algeria might be successful.
But many analysts are skeptical.
“Talk is cheap,” Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas, told Reuters Global Oil Forum. “Reality will set in and the market will realize that the agendas of various OPEC producers are not aligned.” –Reuters