Oil down more than 3% as U.S. crude stockpiles rise 6 straight weeks 

EIA reports 2.8 million-barrel weekly climb in crude supplies

Oil futures lost more than 3% on Wednesday as U.S. government data showed that crude inventories rose for a sixth week in a row.

Strength in the dollar added to pressure on crude-oil prices, as futures relinquished nearly all of their gains from a day earlier.

“The crude complex has faced gale-force headwinds from a strengthening U.S. dollar, in combination with ongoing oversupply concerns highlighted in today’s weekly inventory report,” said Matt Smith, a commodity analyst at ClipperData.

December West Texas Intermediate crude CLZ5, +0.06%  settled at $46.32 a barrel, down $1.58, or 3.3%, on the New York Mercantile Exchange. Prices gave back most of the 3.8% they gained a day earlier.

December Brent crude LCOZ5, +0.12%  on London’s ICE Futures exchange fell $1.96, or 3.9%, to $48.58 a barrel.

“Here we are, mired in the $40s, with production ticking higher and oil inventories 100 million barrels higher than this time last year,” said Smith.

Early Wednesday, the U.S. Energy Information Administration reported a climb of 2.8 million barrels in crude supplies for the week ended Oct. 30. That matched the increase reported by the American Petroleum Institute on Tuesday. Analysts polled by Platts expected supplies to be up by 2.45 million barrels.

The report also showed that domestic production totaled 9.16 million barrels a day last week, up 48,000 barrels a day from a week earlier. Refinery utilization continued to edge higher to stand at 88.7% of capacity, up from 87.6%.

Weakness in oil prices reflected “relentless production and [supply] surpluses,” said Richard Hastings, macro strategist at Seaport Global Securities. “Until refinery utilization tops about 92%, then we are going to see continued pressure from the fundamental side of the story.”

Even so, “it is notable that prices are holding up quite well under the circumstances, but the price channel is very narrow, between $44 and $50, suggesting the next few weeks could take U.S. oil prices closer to $42 or this could also breakout even higher in the coming weeks, revisiting $50 to $52 per barrel,” he said.

The EIA also reported that gasoline supplies fell by 3.3 million barrels, while distillate stockpiles declined by 1.3 million barrels last week.

On Nymex, December gasoline RBZ5, +0.54% lost 5.4 cents, or 3.7%, to $1.392 a gallon, while December heating oil HOZ5, +0.50%  ended at $1.504 a gallon, down 6.3 cents, or 4%.

December natural gas NGZ15, +0.04%  tacked on nearly a penny to $2.262 per million British thermal units.

Dollar-denominated prices for oil also saw pressure from strength in the U.S. dollarDXY, +0.02% which got a sizable boost on the back of a strong reading on U.S. service-sector growth and comments from Federal Reserve Chairwoman Janet Yellen who said December remains a “live meting: for an interest-rate hike.

Meanwhile, the oil market has yet to contend with a large amount of crude supplies Iran has in storage.

Iran has a “ mammoth amount of oil stored in their tankers and they want to off load that within three months after December,” said Naeem Aslam, chief market analyst at AvaTrade. And usually, when “you want to off load something quick, you need to offer at a price which is better than the competitors—hence we could see the price breaking” below the $40 level.

Source: MarketWatch – Oil down more than 3% as U.S. crude stockpiles rise 6 straight weeks

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