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Oil extends losses after US crude stockpiles unexpectedly rise
[HONG KONG] Oil extended its losses as weekly government data showed US crude stockpiles unexpectedly expanded, keeping inventories at the highest seasonal level in more than three decades.
Futures fell as much as 1 per cent in New York after slipping 3.1 per cent the previous two sessions. Crude supplies increased by 1.06 million barrels last week, according to the Energy Information Administration. They were forecast to drop by 1.5 million barrels in a Bloomberg survey. Refineries lowered operating rates and gasoline inventories fell.
Oil has fluctuated after tumbling more than 20 per cent into a bear market and closing below US$40 a barrel last week for the first time in almost four months. Weakness in global crude markets may persist as demand slows seasonally and fuel inventories remain abundant, the Organisation of Petroleum Exporting Countries said in its monthly report Wednesday.
"The risk is increasingly to the downside," said Angus Nicholson, a market analyst in Melbourne at IG Ltd.
"The trend from here could well be a much bigger and steady increase in US crude inventories. Holding is the best case scenario for oil in the near-term and avoiding a major drop below the technical resistance levels around US$40 a barrel."
West Texas Intermediate for September delivery lost as much as 43 US cents to US$41.28 a barrel on the New York Mercantile Exchange and was at US$41.45 at 8:21 am in London.
The contract lost US$1.06 to US$41.71 on Wednesday, capping a 3.1 per cent drop over the previous two sessions. Total volume traded was about 19 per cent below the 100-day average.
Brent for October settlement dropped as much as 39 US cents, or 0.9 per cent, to US$43.66 a barrel on the London-based ICE Futures Europe exchange. The contract fell 93 US cents to US$44.05 on Wednesday.
The global benchmark crude traded at a US$1.64 premium to WTI for October.
US crude stockpiles increased for a third week to 523.6 million barrels, the EIA reported Wednesday. That's the highest seasonal level in weekly data going back to 1982 and keeps supplies at more than 100 million barrels above the five-year average for this time of year. Crude output dropped for a second week and gasoline inventories slid by 2.8 million barrels to 235.4 million.
There are "lingering concerns" that US and European refiners may reduce processing rates as profits fade amid a continuing overhang of crude and refined fuels, Opec said in its report.
Venezuelan President Nicolas Maduro said he spoke to Saudi Arabia's king about boosting oil prices and is reaching out to the heads of state of fellow producers Russia, Iran and Qatar.