Oil up, then pares gains after U.S. inventory build data

Crude oil futures fell in early Asian trade on Wednesday after US inventories showed a weekly buildup that far exceeded analyst expectations.

USA benchmark West Texas Intermediate (WTI) for delivery in November fell 16 cents to 45.07 a barrel compared with Tuesday’s close.

Tuesday evening, the American Petroleum Institute (API) reported that crude inventories rose by 4.6 million barrels in the week ending September 25th.

Brent was up 15 cents, or 0.3 percent, at $48.38 a barrel by 1:03 p.m. EDT (1703 GMT).

The US Energy Information Administration (EIA) is scheduled to release inventory data for the week ended September 25 on Wednesday, along with weekly production data.

“The large crude oil inventory build, driven by a drop in the refinery utilization rate, makes for a bearish report“, said John Kilduff, partner at Again Capital LLC in New York. The volume of all futures traded was about 54 percent below the 100-day average.

Stuart Ive, a manager at OM Financial, said the technical picture on oil prices isn’t clear as investors are still uncertain about risk levels in global markets, but there appears to be at least a period of consolidation for oil prices at the moment. Latest closing price was -61.67% below its 50-day moving average and -83.67% below its 200-day moving average. Crude output nationwide rose by 19,000 to 9.136 million barrels per day, following a moderate increase in Alaskan ouput. Iraq this month raised its crude production to 3.912 million barrels a day, Oil Minister Mahdi said on his Facebook page. In terms of oil consumption, India is expected to consume ~3.9 million barrels per day in 2015 (h/t IEA), putting it neck-and neck with Japan as the third largest oil consumer in the world (before surpassing them next year). In the meantime, it’s plausible that oil prices will range between $40 and $60 per barrel for the next one to two years.

The share price of Valero Energy Corporation (NYSE:VLO) was up 1.50% from the previous closing rate. It was on course to end down 8 percent on the month and 24 percent on the quarter.

Traders are keeping an eye on Joaquin, a storm that grew into a Category 1 hurricane as it bore down on the Bahamas, according to the US National Hurricane Center.

Prices of other key raw materials, including copper, have been battered too, squeezing income for commodity producers and triggering a sector-wide crisis.