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Oil retreats after Opec deal rally on reported US supply gain
[HONG KONG] Oil retreated from the highest close since July 2015 as focus shifted to expanding US crude stockpiles after Opec and other producing nations agreed to cut output to stabilize the market.
Futures slid as much as 1.7 per cent in New York after climbing 6.5 per cent over the previous four sessions. US inventories rose by 4.68 million barrels last week, the industry-funded American Petroleum Institute was said to report.
Government data Wednesday is forecast to show supplies fell. Oil markets will swing into deficit in the first half of 2017 as producers curb supply, according to the International Energy Agency, earlier than its previous forecast.
Oil has gained about 16 per cent since the members of the Organization of Petroleum Exporting Countries agreed Nov 30 to trim output for the first time in eight years.
The deal reached over the weekend in Vienna between the group and 11 non-Opec producers including Russia encompasses countries that produce about 60 per cent of the world's crude. US supplies are at the highest seasonal level in more than three decades, weekly government data show.
"There is a large crude inventory and that acts as a cap on prices in the short term," said Ric Spooner, a chief market analyst at CMC Markets in Sydney.
"The US$55 to US$60 a barrel area may prove to be a bit of a headwind, that's the sort of level that could attract increased production on sustained prices."
West Texas Intermediate for January delivery lost as much as 88 US cents to US$52.10 a barrel on the New York Mercantile Exchange, and was at US$52.37 at 8.12am Hong Kong time.
The contract gained 15 US cents to close at US$52.98 on Tuesday. Total volume traded was about 2.4 per cent below the 100-day average.
US Stockpiles Brent for February settlement fell as much as 83 US cents, or 1.5 per cent, to US$54.89 a barrel on the London-based ICE Futures Europe exchange. The contract rose 3 US cents to US$55.72 a barrel on Tuesday, the highest settlement since July 2015. The global benchmark crude traded at a premium of US$1.85 to WTI.
US gasoline stockpiles increased by 3.91 million barrels last week, the API reported Tuesday, according to a person familiar with the figures. Nationwide crude inventories are forecast to have decreased by 1.5 million barrels, according to the median estimate in a Bloomberg survey before an Energy Information Administration report Wednesday.