U.S. Crude Down Ahead of Inventory Data; OPEC Speculation Lingers
U.S. crude futures fell nearly 1 percent on Wednesday ahead of important inventory data while Brent steadied near 5-week highs on speculation that the world's crude producers might still be able to strike a deal to support the market.
Analysts expect the U.S. Energy Information Administration to announce a fourth straight weekly rise in domestic crude stockpiles and draws in gasoline and distillates for the week ended Aug. 12, in data due at 10:30 a.m. EDT (1430 GMT).
Preliminary data on Tuesday from the American Petroleum Institute, a trade group, showed a draw in U.S. crude stockpiles instead, and builds in gasoline and distillates.
Any outsized inventory increase in crude or refined products cited by the EIA could snap a four-day long rally in oil that has added some 11 percent to prices, analysts said.
Dominick Chirichella, senior partner at the Energy Management Institute in New York, said he expected the EIA to report a stockpile build in crude as well as distillates, that include diesel, and a modest decline in gasoline inventories.
"I am maintaining my oil view and short term bias to neutral," Chirichella wrote in a commentary. "The global surplus still exists and there is still a possibility that oil prices could retrace further.
U.S. West Texas Intermediate (WTI) crude futures fell by 42 cents, or 0.9 percent, to $46.16 by 9:52 a.m. EDT (1452 GMT). It hit $46.73 in the previous session, its highest since July 12.
Brent crude futures were down 10 cents at $49.13 a barrel, after hitting a 5-week high at $49.48 earlier.
Oil's advance since Thursday came after Saudi Arabia, the kingpin in the Organization of the Petroleum Exporting Countries, stoked speculation that OPEC was ready to reach an output freeze agreement with others, including No. 1 oil producer Russia.
The fight for market share among key OPEC members has made market watchers doubtful of such producers' sincerity in reining in oversupply. A production freeze plan by OPEC failed in April.
"Should this rally be believed? Do words speak louder than action for the second time this year? Or is the current strength one to be sold into?," PVM Oil Associates Tamas Varga asked in a market commentary.
"The advocates of a sustained price rally are firm believers in some kind of agreement between OPEC producers possibly together with non-OPEC countries. Recent history is not on their side and the Doha failure back in April is likely to encourage bears with itchy fingers to soon start selling short," he added.
(By Barani Krishnan, Additional reporting by Amanda Cooper in LONDON and Henning Gloystein in SINGAPORE)
