Yemisi Izuora
Oil prices has continued to show weakness as it fell for a third day on Wednesday after data from an industry body showed crude stocks rose more than expected last week, while a selloff in other commodities, stocks and bonds added to investors’ bearish mood.
Brent crude, the global benchmark, was down 0.69 cents, or about 1 percent, at $68.33 a barrel a nearly two-week low.
U.S. West Texas Intermediate (WTI) futures were down, 67 cents, or 1 percent, at $63.83, after falling to its weakest level in more than a week.
On Tuesday, U.S. crude fell 1.6 percent to close at $64.50 a barrel, the contract’s decline far outpacing a 0.6 percent drop in the price of Brent.
“Increasing concerns over the rising U.S. production continue to mount pressure on the commodity,” said Mihir Kapadia, chief executive of Sun Global Investments. “Over the past couple of years, U.S. producers have gained significant inroads in the global oil market industry,” he said.
Prices on both WTI and Brent are still on track for a fifth month of gains.
But the report from the American Petroleum Institute, API, late on Tuesday showing crude stocks rose by 3.2 million barrels last week cast a further bearish pall over the market.
It came after data showed that U.S. energy companies added 12 oil rigs last week, the biggest weekly increase since March.
The API was said to have reported crude stockpiles increased 3.23 million barrels last week. Inventories probably rose by 900,000 barrels last week, according to the median estimate of analysts surveyed by Bloomberg. Weakness in the stock market also led to crude’s decline.
A build in crude is “fairly realistic,” James Williams, president of London, Arkansas-based energy researcher WTRG Economics, said by telephone. “Either this week or next week, we are going to see builds,” as refiners enter seasonal maintenance.
The API report was also said to show that gasoline stockpiles climbed by 2.69 million barrels last week, which would make twelve consecutive weeks of increases if EIA data confirms it.
As the Organization of Petroleum Exporting Countries works to reduce output, concern that U.S. crude production will hit new records remains on investors’ minds. Yet, OPEC and Russia will let oil prices climb as high as the market can bear, according to Gary Ross, global head of oil analytics at S&P Global Platts.