Oil drops 2% on US crude, gasoline build, slight increase in OPEC+

A poster with crude oil written on the side of a storage tank in the Permian Basin in Menton, Loving County, Texas, United States, November 22, 2019. REUTERS/Angus Mordant

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  • US Crude Oil and Gasoline Inventories Increase Unexpectedly – EIA
  • OPEC + decides to increase a small 100,000 barrels per day in production target
  • The United States pushed for a more meaningful supply increase
  • Iranian and US negotiators travel to Vienna for talks

HOUSTON (Reuters) – Oil prices fell 2% on Wednesday as US crude and gasoline stocks rose unexpectedly last week and after OPEC+ said it would raise its oil production target by just 100,000 barrels per day.

Brent crude futures fell $2.35, or 2.4 percent, to $98.19 a barrel by 11:09 am ET (1509 GMT). West Texas Intermediate (WTI) crude futures fell $2.30, or 2.5%, to $92.10. Both decades swung in the past.

On top of next month’s Brent crude futures contracts loading barrels within six months, it reached its lowest level in three months, indicating waning concern about a shortage of supply. The premium for WTI futures contracts for the same months touched its lowest level in nearly four months.

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The Energy Information Administration said that US crude oil stocks rose unexpectedly last week as exports fell and refineries cut their flow, while gasoline stocks also recorded a surprise increase as demand slowed.

Crude stocks rose 4.5 million barrels last week, compared to analyst expectations for a draw of 600,000 barrels, and gasoline stocks rose 200,000 barrels, against expectations for a 1.6 million barrel drop.

“Crude oil numbers are much higher than expected. Gasoline is disappointing. You should never see an increase in gasoline over the summer. It’s a very bearish report,” said Bob Yuger, director of energy futures at Mizuho Bob Yuger.

Ministers of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, agreed to slightly increase the group’s production target, equal to about 0.1% of global oil demand. Read more

Algerian Energy Minister Mohamed Arkab told state television that Algeria’s oil production in September will rise to 1.57 million barrels per day.

While the United States has asked the group to increase production, spare capacity is limited and Saudi Arabia may be reluctant to increase production at the expense of Russia, which has been hit by sanctions over the conflict in Ukraine.

Three delegates told Reuters that before the meeting, OPEC + cut its forecast for the oil market surplus this year by 200,000 barrels per day to 800,000 barrels per day. Read more

Also weighing on prices, Iranian and US officials said they were traveling to Vienna to resume indirect talks on Iran’s nuclear programme, reviving fading hopes of lifting sanctions that hamper Iran’s oil exports. Read more

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Additional reporting by Laila Kearney in New York, Shadia Nasrallah in London, Sonali Paul and Emily Chow. Editing by Margarita Choi and David Goodman

Our Standards: Thomson Reuters Trust Principles.

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