U.S. crude falls on profit taking, oversupply worries | Reuters

SINGAPORE U.S. crude futures fell in early Asian trade on Wednesday as profit taking and concern over a larger-than-expected build in U.S

Reuters April 13, 2016 05:45:12 IST
U.S. crude falls on profit taking, oversupply worries
| Reuters

US crude falls on profit taking oversupply worries
 Reuters

SINGAPORE U.S. crude futures fell in early Asian trade on Wednesday as profit taking and concern over a larger-than-expected build in U.S. crude stocks outweighed more positive news that Russia and Saudi Arabia had reached consensus on an oil output cap.

U.S. crude CLc1 fell 46 cents to $41.71 a barrel as of 2318 GMT after settling up $1.81, or 4.48 percent, in the previous session.

Brent crude LCOc1 had yet to start trading but hit a four-month high in the previous session, settling up $1.86, or 4.3 percent, at $44.69 a barrel.

"There are two things. There has been a fantastic rise in prices so I think in the Asian time zone there's been a little bit of profit taking," said Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance.

"The second thing is that while we're waiting for more official inventory data, investors are thinking 'are prices warranted at these levels'," he said.

Investors are also concerned oil production could rise as prices move even higher curtailing moves by oil producers, including Russia and Saudi Arabia, for an oil output cap.

That came as Russia and Saudi Arabia were reported to have reached a consensus on Tuesday about an oil output freeze, ahead of an oil producers' meeting in Doha on April 17.

"There's no reason for a freeze when oil is at $50 a barrel. If oil prices move back to $35 a barrel there'll be rhetoric and action for an output cap; at $50 a barrel there'll just be rhetoric," Barratt told Reuters on Wednesday.

That came as U.S. crude stocks rose by a larger than expected 6.2 million barrels to 536.3 million last week, according to data from industry group the American Petroleum Institute.

That compared with analysts' expectations for 1.9 million barrel increase.

Official data from the U.S. Energy Information Administration is due out later on Wednesday. [EIA/S]

U.S. crude production is forecast to fall by 560,000 barrels per day to 8.04 million barrels in 2017, while U.S. demand would increase by 190,000 bpd, according to the EIA's short term energy outlook published on Tuesday.

Global oil demand will climb to 1.16 million barrels per day, a 10,000 barrel rise compared with earlier estimates, the EIA said in its monthly forecast on Tuesday.

The agency raised its oil demand growth estimate for 2017 by 120,000 bpd to 1.33 million bpd.

(Reporting by Keith Wallis; Editing by Stephen Coates)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

also read

Modi 2.0: From foreign policy highlights to women's empowerment, how PM created milestones
Politics

Modi 2.0: From foreign policy highlights to women's empowerment, how PM created milestones

On the socio-political front, the historic step of abrogating Article 370, which came into effect in 1950, and Article 35A, which came into effect in 1954, figures high on the list of achievements

Goldman Sachs says India could surpass UK as world's fifth largest stock market by 2024
Business

Goldman Sachs says India could surpass UK as world's fifth largest stock market by 2024

Indian start-ups have raised $10 billion through IPOs so far this year — more money than was raised in the last three years, the investment bank said in a report dated 19 September

Sanctions in the time of pandemic amounts to crimes against humanity, says Ebrahim Raisi
World

Sanctions in the time of pandemic amounts to crimes against humanity, says Ebrahim Raisi

The Iranian president in his maiden speech at the UN slammed the US saying the world no longer cares about "America First" or "America is Back"