Oil Prices Fall After Unexpected Supply Increase

Crude-oil futures ended lower Wednesday, breaking a five-session winning streak after a government update showed a surprise increase in inventories.

Crude for October delivery retreated 16 cents, or 0.2%, to settle at $97.01 a barrel on the New York Mercantile Exchange.

Oil were in and out of the red for most of the session, trading as high as $98.06 a barrel earlier. Oil changed hands at $97.24 a barrel moments before the supply report.

The Energy Information Administration reported an increase of 2 million barrels for the week ended Sept. 7.

That contrasted with analyst expectations of a decline of 3.3 million barrels, according to Platts.

The EIA also reported a drop of 1.2 million barrels in gasoline inventories as well as an increase of 1.5 million barrels in distillates stocks. The analysts surveyed by Platts had expected gasoline and distillates inventories to be down by 2.3 million barrels and 1.5 million barrels, respectively, on the week.

Gasoline futures turned lower mid-session, with the October contract down 4 cents, or 1.4%, to settle at $3 a gallon. That snapped a four-day winning streak for gasoline futures.

October heating oil held to gains, up 3 cents, or 0.9%, to $3.21 a gallon. The settlement was heating oil’s highest since April 3.

Crude settled 0.7% higher on Tuesday, a fifth consecutive session of gains, boosted in part by hopes for central-bank stimulus.

Such hopes started to fade a bit as the U.S. Federal Reserve’s policy-setting meeting got underway, said David Bouckhout, an analyst with TD Securities. “Investors took some risk off the table” before the announcement on Thursday at the conclusion of the two-day meeting, he said.

Some support came from geopolitical concerns and a decision by a German court. Energy traders kept an eye on developments in the Middle East after the U.S. ambassador to Libya was killed in Benghazi on Tuesday.

Brent crude for November delivery advanced 56 cents, or 0.5%, to $115.33 a barrel on ICE Futures London, trimming early gains. Brent is traditionally more sensitive to concerns about the Middle East.

Earlier Wednesday, a German court ruling cleared the way for ratifying Europe’s bailout plan. Germany’s Federal Constitutional Court said it won’t block the ratification of the European Stability Mechanism, potentially getting Europe a step closer to solving its sovereign-debt crisis.

Also Wednesday, the International Energy Agency said global pressures are clouding the oil-market outlook. It maintained its oil-demand growth forecasts for 2012 and 2013 at 800,000 barrels a day.

Source: https://www.marketwatch.com

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