Oil At Two Week Low
By Alison Sider and Christopher Alessi
Oil prices fell to a two week low Wednesday as investors continued to cash in on last week's bullish market and retrace crude's upward march.
U.S. crude futures tumbled 44 cents, or 0.87%, to $49.98 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 20 cents, or 0.36%, to $55.80 a barrel on ICE Futures Europe.
The move lower came despite what analysts said was bullish data on oil storage levels. The U.S. Energy Information Administration reported that crude stockpiles shrank by 6 million barrels last week, exceeding the 300,000 barrel decline analysts were expecting, as foreign buyers clamored for cargoes of U.S. crude.
But some market participants have doubts that the declines will continue, said Gene McGillian, research manager at Tradition Energy. Fuel demand eased last week, according to the EIA figures, and U.S. oil output edged higher.
"For the bears in the market, the concern is that maybe some of the strong demand we saw might be pulled out of the market as we get further from summer driving season," Mr. McGillian said. "I think the market is showing signs that the rally has exhausted itself for the time being."
A big jump in shipments of U.S. crude abroad helped drain oil inventories, but some expect the recent surge in exports will be temporary, as it reflects how Hurricane Harvey temporarily pushed U.S. prices lower while global prices kept climbing.
U.S. crude oil exports surged to 1.984 million barrels a day -- an increase of close to 500,000 barrels a day from the previous week's level, which was also a record.
Kyle Cooper, a consultant at Ion Energy Group, said Wednesday's data was largely bullish, but perhaps not enough to attract many new buyers, as speculative investors have already made big bets on rising oil prices.
"It looks like there wasn't enough good stuff to bring more buyers into the market," Mr. Cooper said.
The price of Brent nearly hit $60 a barrel last week but has since come down by around 6% after "edgy traders" reversed bullish positions to take profits, according to Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd.
"A return of the recent feel-good factor now seems like a distant prospect and any price gains will be hard won," Mr. Brennock noted.
The spike in the price of Brent last month was also "driven to a large extent by speculation," according to analysts at Commerzbank. "Brent is showing more and more signs of speculative excess," the analysts wrote in a note Wednesday.
The U.S. data Wednesday showed that gasoline stockpiles rose by 1.6 million barrels. Total inventories of petroleum products fell 6.1 million barrels.
Gasoline futures rose 1.5 cents, or 0.96%, to $1.5805 a gallon. Diesel futures gained 2.34 cents, or 1.34%, to $1.7739 a gallon.
Write to Alison Sider at email@example.com and Christopher Alessi at firstname.lastname@example.org
(END) Dow Jones Newswires
October 04, 2017 15:52 ET (19:52 GMT)Copyright (c) 2017 Dow Jones & Company, Inc.