Oil snaps longest gain in a month on signs U.S. supplies rose

By Grant Smith on 6/28/2017

LONDON (Bloomberg) -- Oil fell, snapping the longest run of gains in a month, as U.S. industry data showed crude stockpiles rose.

Futures lost as much as 1.3% in New York after climbing 4% the previous four sessions. U.S. stockpiles expanded by 851,000 bbl last week, the API was said to report on Tuesday. That runs counter to expectations for government inventory data due to be published Wednesday, which is forecast to show inventories extended declines.

Oil tumbled into a bear market last week on concerns that rising global supply will counter output cuts from OPEC and its partners. U.S. crude inventories remain stubbornly high, more than 100 million bbl above the five-year seasonal average, according to data from the EIA.

“It has become obvious by now that the current OPEC plan is not working, or at least has not been working in the first half of the year,” said Tamas Varga, an analyst at PVM Oil Associates in London. “Bears will probably become the more dominant factor again” if the API stockpile figures are repeated by U.S. government data.

WTI for August delivery lost as much as $0.57 to $43.67/bbl on the NYME, and was at $44.08 in London. Total volume traded was in line with the 100-day average. The contract gained $0.86 to close at $44.24 on Tuesday.

Brent for August settlement was down $0.7 at $46.58/bbl on the London futures exchange after falling as much as 0.9% earlier. Prices added $0.82 to $46.65 on Tuesday. Brent crude traded at a premium of $2.49 to WTI.

U.S. gasoline stockpiles increased by 1.35 MMbbl last week, the API said, according to people familiar with the data. American crude inventories probably slid by 2.25 MMbbl, according to the median estimate in a Bloomberg survey before the EIA report.

Oil Market News

Russia isn’t discussing deeper output cuts with OPEC, Energy Minister Alexander Novak told reporters in Moscow. The president of OPEC member Venezuela blamed a former ally for orchestrating an incident in Caracas on Tuesday evening that involved a police helicopter flying over government institutions and allegedly firing shots and dropping grenades.

Canada’s active rigs climbed to 169 last week, the highest level since March, according to data posted on the Canadian Association of Oilwell Drilling Contractors website. Short positions held by speculators in Brent crude advanced to 169 MMbbl last week, the highest since records started in 2011, according to exchange data.

Rosneft kept its oil flowing normally after a cyberattack, although some filling station cash registers were affected.

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