Oil Eases Towards $34 As U.S. Inventory Rise Counters Producer Deal
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LONDON (Reuters) – Oil fell towards $34 a barrel on Thursday, giving up an earlier gain, as a U.S. government report showing a rise in crude stocks underlined the supply glut, countering optimism over this week’s deal by oil producers to freeze output.
But Wednesday’s report from industry group the American Petroleum Institute said they unexpectedly fell.
“It’s overall bearish and nullifies the API data across the board,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.
Analysts had expected a sell-off if the U.S. government inventory report did not confirm the API’s stock decline and warned of continued choppy trading.
“What we see still is extreme volatility,” said Carsten Fritsch, analyst at Commerzbank. “I would not be surprised to see prices retreating again by a big margin in coming days.”
Oil has collapsed from levels above $100 a barrel in mid-2014 due to excess supply, in a slide that deepened after the Organization of the Petroleum Exporting Countries later that year dropped its policy of cutting supply to boost prices.
“The agreement will do little to reduce the current supply glut,” BMI Research said in a report on Thursday.
The sanctions were lifted last month, allowing Iran to resume selling oil to the European Union. Sources familiar with Iranian thinking have said this week that Iran would not freeze output at current levels.
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