Oil stays below $47 as
U.S. inventory report revives glut worries
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[June 28, 2017]
By Alex Lawler
LONDON (Reuters) - Oil edged lower toward
$47 a barrel on Wednesday after an industry report said U.S. inventories
increased, reviving concerns that a three-year supply glut is far from
The American Petroleum Institute (API) said on Tuesday U.S. crude
inventories rose by 851,000 barrels last week, while analysts expected a
decline. Inventories of gasoline and distillates also increased, the API
"There appears to be no end to the bearish news on the oil market," said
Carsten Fritsch, analyst at Commerzbank. "This is likely to add fuel to
doubts that any process of market tightening is underway."
Brent crude <LCOc1> was down 9 cents at $46.56 a barrel at 1033 GMT. It
reached a seven-month low of $44.35 on June 21. U.S. crude fell 17 cents
A rise in U.S. stocks would suggest global supplies are still ample
despite the effort led by the Organization of the Petroleum Exporting
Countries to cut output by 1.8 million barrels per day (bpd) from
Top exporter Saudi Arabia and the other producers are trying to get rid
of a supply glut which prompted prices to slide from above $100 a barrel
"The U.S. crude oil stock build is not huge but it is still a build and
that does not go in the direction of the Saudi rebalancing," said
Olivier Jakob, analyst at Petromatrix.
OPEC and its allies agreed on May 25 to extend the supply cut into 2018,
but Brent has fallen from as high as $54 since then on rising production
from the United States and from Nigeria and Libya, two OPEC members
exempt from cutting output.
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A pumpjack drills for oil in the Monterey Shale, California, April
29, 2013. T REUTERS/Lucy Nicholson
Nonetheless, some analysts believe the sell-off is overdone.
Traders will be awaiting the U.S. government's official supply report
for confirmation of the API figures. The Energy Information
Administration releases its report at 1430 GMT.
Ian Taylor, head of the world's largest independent oil trader Vitol,
said Brent will stay in a range of $40-$55 a barrel for the next few
quarters as higher U.S. production slows a rebalancing of the market.
Analysts at JBC Energy in a report saw room for prices to recover.
"While the physical crude market remains steady at best, it is worth
noting there is now significant room for speculative support for prices
to develop if a catalyst were to emerge," JBC said.
(Additional reporting by Henning Gloystein; Editing by Keith Weir and
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