Oil mixed as US crude stockpiles rise unexpectedly

New York — Oil was mixed on Thursday, with US crude slipping and Brent futures little changed after data showed an unexpected build in US crude oil stockpiles.

US crude futures were down 58c at $73.56 a barrel by 4pm GMT, still in sight of Tuesday’s three-and-a-half-year high above $75. Brent crude futures were up 11c at $78.35 a barrel.

US crude stockpiles rose 1.3-million barrels last week, according to data from the US Energy Information Administration (EIA), against analysts’ expectations of a 3.5-million-barrel decline.

“An unexpected build in the US commercial crude inventory has prompted profit-taking,” said Abhishek Kumar, senior energy analyst at Interfax Energy in London. Inventories at Cushing, Oklahoma, however, the delivery point for US crude futures, fell to their lowest since December 2014.

On Wednesday, US President Donald Trump accused oil cartel Opec of driving up fuel prices.

“The OPEC Monopoly must remember that gas prices are up & they are doing little to help,” Trump wrote on his personal Twitter account. “If anything, they are driving prices higher as the United States defends many of their members for very little $’s … This must be a two way street, REDUCE PRICING NOW!”

Opec together with a group of non-OPEC producers led by Russia started to withhold output in 2017 to prop up the market. Saudi Arabia’s objective, revealed at the Opec meeting in June, has been to stabilise production and prices around current levels. The kingdom, its Gulf allies and Russia indicated that they will lift production by about 1-million barrels per day (bpd) to offset losses from Venezuela and Iran, but not more.

On Thursday, Saudi Arabia said that it would be reducing prices of its Arab Light grade crude exports.

“Saudi lowered some of the prices for some of its products to Asia and to Europe and to the US. Seems like this is sort of related to Trump tweets,” said Stewart Glickman, energy equity analyst at CFRA Research in New York.

The recent strength in oil prices has, in part, been spurred by a US announcement that it plans to re-introduce sanctions against Iran, Opec’s third-largest producer, from November, targeting oil exports. An Iranian Revolutionary Guards commander said on Wednesday that Tehran might block oil shipments through the Strait of Hormuz, a major route for transporting crude in the Gulf.

“Roughly 30% of all seaborne oil is transported through this strait every day,” Commerzbank said in a note. “A blockade of this transport route would thus have dramatic consequences for global oil supply and an impact on prices that is almost impossible to put into figures.”

The US Navy stands ready to ensure freedom of navigation and free flow of commerce, a spokesperson for the US military’s Central Command said on Thursday.

Reuters