Oil prices fall as US crude stocks rise 2.6M barrels
December 30, 2015, 5:23 pm

Oil prices were down about 3 percent after government data showed U.S. crude stockpiles unexpectedly rose in the last week, though not by as much as an earlier industry report indicated.

Inventories of U.S. commercial crude jumped by 2.6 million barrels in the week through Dec. 25, according to the Energy Information Administration.

A Reuters poll of nine analysts estimated that crude stocks fell 2.5 million barrels. The American Petroleum Institute, an industry group, on Tuesday reported a 2.9 million barrel build-up in U.S. stocks.

Front-month U.S. West Texas Intermediate crude futures were trading at $36.67 per barrel at 10:49 a.m. EDT (1549 GMT), down $1.20, or 3.2 percent, from their settlement in the previous session. Brent was down $1.15, or 3 percent, at $36.64 a barrel.

Crude stocks at the Cushing, Oklahoma, delivery hub increased by 892,000 barrels to a record, EIA said.

Gasoline stocks rose by 925,000 barrels, compared with analysts` expectations in a Reuters poll for a 896,000-barrel gain. Distillate stockpiles, which include diesel and heating oil, were up by 1.8 million barrels, versus expectations for a 1.0 million-barrel increase, the EIA data showed.

Brent crude oil earlier retreated toward 11-year lows on Wednesday as indications of slowing global energy demand bumped up against record-high inventories.

Benchmark Brent, near $37 per barrel, traded less than $1 away from those lows reached last week as the primary supportive factor — an expected cold snap in Europe and the United States — was forecast to be short-lived.

"There is no significant improvement in the prompt fundamentals," said Olivier Jakob, managing director of PetroMatrix. He warned that low traded volumes into the new year made flat prices susceptible to sharp movements.

Crude prices have plunged by two-thirds since mid-2014 as soaring output from the Organization of the Petroleum Exporting Countries, Russia and the United States created a global surplus of between half a million and 2 million barrels per day.

Oil exports from southern Iraq, at 3.27 million barrels per day so far in December, held near a record, cementing its role as the fastest source of supply growth in 2015.

Forecasts that a cold spell in Europe would not last long also undercut price support that had helped U.S. crude and Brent rally by around 3 percent in the previous session.

For most of the United States, a brief cold period is also not expected to continue much more than a week.

"The weather has been so much above normal that ... it will take a lot of colder temperatures to really reverse the overhang," Jakob said.


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