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Oil holds losses near one-week low after surprise stockpile gain
[HONG KONG] Oil held losses near the lowest close in a week as US crude stockpiles unexpectedly increased, keeping supplies at the highest in at least three decades with the peak summer demand period approaching its end.
Futures were little changed in New York after falling 2.8 per cent Wednesday. Inventories rose by 2.5 million barrels last week, according to the Energy Information Administration.
The median forecast in a Bloomberg survey had projected a decline. Iraq will attend informal Opec talks next month in Algiers, Deputy Oil Minister Fayyad Al-Nima said in a phone interview.
Oil entered a bull market on Aug 18, less than three weeks after tumbling into a bear market. Prices surged partly on speculation that informal discussions among members of the Organisation of Petroleum Exporting Countries and other producers may lead to action to stabilise the market.
US crude supplies remain more than 100 million barrels above the five- year average as the nation's summer driving season approaches its end on Labor Day, Sept 5.
"We have had a bit of a pullback, but that is after a bull market rally, so it's probably a healthy thing for the market to pause and digest the situation," said Angus Nicholson, a market analyst in Melbourne at IG Ltd.
"If oil holds above US$45, that's relatively bullish for the near-term outlook." West Texas Intermediate for October delivery was at US$46.76 a barrel on the New York Mercantile Exchange, down 1 US cent, at 10:57 am in Hong Kong. The contract slid US$1.33 to US$46.77 on Wednesday, the lowest close since Aug 16. Total volume traded was about 53 per cent below the 100-day average.
Brent for October settlement was 5 US cents lower at US$49 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 91 US cents, or 1.8 per cent, to US$49.05 on Wednesday. The global benchmark crude was at a US$2.22 premium to WTI.
US crude stockpiles expanded to 523.6 million barrels through Aug 19, the EIA reported Wednesday. Supplies were forecast to decline by 850,000 barrels, according to the median estimate in a Bloomberg survey of analysts.
Gasoline inventories increased by 36,000 barrels to 232.7 million, the EIA said.
Ecuador and Iran are interested in stabilising the oil price, Ecuador's Foreign Minister Guillaume Long said in a statement after meeting with Iranian counterpart Mohammad Javad Zarif.
Traders should short WTI at US$50 to US$55 a barrel, according to Phibro LLC Chief Executive Officer Simon Greenshields.