US Oil Prices Fall 2% On Surprise Build In Crude Stocks

“I can not continue to stress that at this time of year we are supposed to be getting draws”, Tariq Zahir, oil trader at Tyche Capital Advisors in NY, said, referring to the summer inventory drawdowns expected for crude.

Oil prices were already down this morning after data released by the American Petroleum Institute showed yesterday that U.S. crude inventories rose by 4.46m barrels in the week ending 19 August. Distillate stockpiles, which include diesel and heating oil, rose by 122,000 barrels, versus expectations for a 400,000-barrel increase.

Luckock said the Trafigura planned to ship anywhere between 5 million to 7 million barrels to Europe this month and in September, with oil coming from Eagle Ford, Midland, or U.S. Sweet blends, adding that Trafigura “is moving in excess of 10 Aframax-size parcels of United States of America domestic crude oil to Europe loading across August and September, with the majority in September”. Brent, the global benchmark, fell 91 cents, or 1.8%, to $49.05 a barrel on ICE Futures Europe. Royal Dutch Shell (RDSA) was off 0.6%.

IBD’S TAKE: Analysts project a broad recovery among domestic energy producers in 2017, and shale oil firms like Diamondback Energy and Continental Resources are poised to benefit the most. He said he could see prices drifting closer to $45 a barrel over the next few days.

Many analysts remain skeptical that an output deal can be reached. In a way, it was nearly a repeat of what was happening earlier in the year when oil prices would jump on such headlines only for the gains to quickly evaporate on realisation that Iran was actually not going to be part of any deal.

Sources familiar with the Iranian regime indicated earlier this week that Tehran may be willing to cooperate on a production cap now that the country is approaching its pre-sanction production levels. Prices surged partly on speculation that informal discussions among members of the Organization of Petroleum Exporting Countries may lead to action to stabilize the market.