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Oil drops more than 1% on profit taking after 4 days of gains
[HOUSTON] Oil prices fell more than 1 per cent on Thursday, breaking four days of gains, pressured by larger-than-expected product inventories in the United States and profit-taking after a recent run-up in markets.
Brent crude settled down 92 cents, or 1.6 per cent, at US$57.23 a barrel. The global benchmark is still about 30 per cent above its mid-year levels.
US light crude settled down 75 cents, or 1.4 per cent, to US$51.29, but is still nearly 25 per cent higher than June's lows.
Ongoing tension in the Middle East has boosted prices, but analysts say those concerns may now be priced into the market.
"The geopolitical risk that came rushing into the market is starting to come out," said John Kilduff, a partner at hedge fund Again Capital LLC.
Kurdish officials said thousands had fled the Kirkuk region fearing persecution since Iraqi armed forces retook it following a referendum on Kurdish independence that was rejected by Baghdad.
Iraq said it expects to restore Kirkuk's oil production to last week's levels by Sunday.
Royal Dutch Shell's subsidiary in Nigeria, SPDC, lifted force majeure Thursday on Bonny Light crude oil exports.
Meanwhile, Chevron Corp said it temporarily suspended oil and gas drilling activity in Iraqi Kurdistan.
Analysts said they have seen some profit-taking after two weeks of gains. Energy equities were also weaker, falling to 3-1/2-week lows.
US President Donald Trump last week refused to certify Iran's compliance with a nuclear deal, leaving Congress 60 days to decide further action against Tehran. That could imply the resumption of sanctions against Iran, which reduced supply by about 1 million bpd during the previous round.
However, it is unlikely the United States will get the same level of cooperation from other countries as it did when it previously sanctioned Iran.
Analysts said crude supply should keep tightening if the Organization of the Petroleum Exporting Countries and partners, including Russia, agree an expected extension to their deal to curb production.
The market turned bearish on Wednesday after the US Energy Information Administration reported a surprise drop in US refining rates and an unexpected build in fuel stocks last week that signalled slower demand in the world's top oil consumer.
The fuel build overshadowed a 5.7 million-barrel slump in US crude inventories and an 11-per cent tumble in crude output last week to 8.4 million barrels per day (bpd) as production was shut in by Hurricane Nate.