Oil prices head lower after data shows spike in U.S. supplies 

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Crude oil prices pulled back on Wednesday, reversing gains made in the New York session on the heels of data showing a bigger-than-expected climb in U.S. supply.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in March CLH7, -0.62% traded at $52.82 a barrel, down $0.38, or 0.7%, in the Globex electronic session. April Brent crude LCOJ7, -0.48% on London’s ICE Futures exchange fell $0.37, or 0.6%, to $55.68 a barrel.

The American Petroleum Institute late Tuesday reported an increase of 9.9 million barrels in U.S. crude supplies for the week ended Feb. 10, according to sources. Analysts had been forecasting a rise of 3.25 million barrels. Oil prices began slipping in late trade after that report was announced.

Investors will look for confirmation later when supply data from the Energy Information Administration will be released Monday morning.

Bears continue to point to increased U.S. oil rig activity, and uncertainty surrounding policies of U.S. President Donald Trump, said Stuart Ive, a private client advisor at OM Financial.

“News that hedge funds are net long 160 million barrels in calendar spread options on the New York Mercantile Exchange (Nymex) shows how the fund managers are expecting the price curve to switch to backwardation as the physical market rebalances itself from the excessive supply,” Ive noted.

Prices have been wavering for many weeks in the low $50s as traders awaited data on OPEC’s compliance with recently agreed cuts. The OPEC data released Monday showed a month-on-month decline of 890,000 barrels a day in January from the previous month to 32.1 million b/d. The drop indicates a 90% compliance level so far by producers who had agreed to curtail their output–in line with figures reported by the International Energy Agency last week, and well above what many market participants were expecting.

OPEC has set itself a high benchmark given its high January compliance, applying pressure to keep this record up in order to not disappoint the market,” BMI Research said in a note.

Nymex reformulated gasoline blendstock for March RBH7, -0.50% — the benchmark gasoline contract — fell 84 points to $1.5383 a gallon, while March diesel traded at $1.6277, 105 points lower.

ICE gasoil for March changed hands at $492.75 a metric ton, down $4.50 from Tuesday’s settlement.

Source: MarketWatch – Oil prices head lower after data shows spike in U.S. supplies

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