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UPDATE 9-Oil down 3 pct again; product builds offset U.S. crude draw

Published 15/09/2016, 06:08 am
© Reuters.  UPDATE 9-Oil down 3 pct again; product builds offset U.S. crude draw
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* EIA reports 559,000 bbls crude draw vs 3.8 mln build forecast

* Markets reacts instead to huge 4.6 mln distillates build

* Next EIA weekly data may shed light on crude draws -analysts

* Offers back on for Nigeria's Que Iboe crude, adding pressure (Adds resumption of sale offers for Nigeria's Qua Iboe crude, paragraph 13)

By Barani Krishnan

NEW YORK, Sept 14 (Reuters) - Oil prices fell about 3 percent for a second straight day on Wednesday, after data showing large weekly builds in U.S. petroleum products offset a surprise draw in crude stockpiles.

U.S. inventories of distillates, which include diesel and heating oil, rose by 4.6 million barrels in the week to Sept. 9, the U.S. Energy Information Administration reported. Analysts had expected an increase of 1.5 million barrels. It was the biggest weekly build since January, putting distillates at six-year seasonal highs.

Gasoline stockpiles also rose more than expected, but crude inventories fell by 559,000 barrels. Analysts had expected a crude build of 3.8 million barrels. EIA/S

"A build to gasoline stocks amid lower runs and lower product supplies counters the bullish theme, as does a strong build to distillates," said Matthew Smith, analyst at New York-based crude cargo tracker Clipperdata.

Brent crude futures LCOc1 settled down $1.25, or 2.7 percent, at $45.85 per barrel.

U.S. West Texas Intermediate (WTI) crude futures CLc1 slid $1.32 cents, or 2.9 percent, to settle at $43.58.

Many analysts were mystified by the weekly draw in crude. It followed an unexpected decline of 14.5 million barrels the previous week, the biggest draw in 15 years, due to Tropical Storm Hermine delaying oil arrivals into the U.S. Gulf Coast.

"So, the million-dollar question is really a 14.5 million barrel question ... as in where did all those barrels go to? The market was expecting some sort of a 'make up call' after last week's storm affected mega-draw," said David Thompson, executive vice president at commodities-focused broker Powerhouse in Washington.

Some expected more light in forthcoming EIA data. "Next week's report will be telling, whether last week's lost barrels finally show up in the petroleum balance sheet," said John Kilduff, partner at New York energy hedge fund Again Capital.

Oil prices also fell 3 percent on Tuesday, pressured by revised forecasts from the International Energy Agency and the Organization of the Petroleum Exporting Countries that suggested the global crude glut could persist. IEA/M OPEC/M

OPEC and other oil producers meet in Algeria on Sept. 26-28 to discuss a crude production freeze. Most analysts are skeptical of a deal.

Oil prices could be pressured further this week, as Nigeria resumes sale offers for its Qua Iboe crude, which had been disrupted since July by a pipeline leak. process of shaving an additional $4.50 a barrel off of the crude benchmarks could require another couple of weeks," said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.

Distillate futures HOc1 settled down 3 percent too, hitting two-week lows. Gasoline futures RBc1 lost 1 percent.

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