Cyber Monday Deal: Up to 60% off InvestingProCLAIM SALE

UPDATE 9-Oil falls below $57 on surprise U.S. stock build

Published 09/07/2015, 01:15 am
© Reuters.  UPDATE 9-Oil falls below $57 on surprise U.S. stock build

* U.S. EIA weekly data shows builds in crude, product stocks

* China share plunge accelerates, regulator warns of panic

* Greek debt crisis also weighs on markets

* No sign of breakthrough in Iran nuclear talks (Updates prices)

By Alex Lawler and Libby George

LONDON, July 8 (Reuters) - Oil prices fell below $57 a barrel on Wednesday as data showed an unexpected build in U.S. crude oil and product stocks.

Brent crude futures quickly reversed gains made earlier in the day on expectations of a decline in U.S. inventories and the failure so far of Iranian nuclear talks to produce a deal.

While most expected the U.S. Energy Information Administration's (EIA) weekly report to show a decline in crude oil and gasoline stocks, both rose, along with distillates. ID:nL1N0ZO11W

"It's negative all around," Gareth Lewis-Davis, commodities strategist with BNP Paribas, said of the EIA report. "It's part of the downward trend that's been going on for two weeks, and it's likely to last for the rest of the day."

Brent crude LCOc1 fell by 10 cents to $56.75 a barrel by 1504 GMT. On Tuesday, Brent dropped to $55.10, its weakest since April 6. U.S. crude CLc1 was down 60 cents at $51.73.

Crude was already facing downward pressure from an accelerating plunge in China's stock market and the Greek debt crisis, both of which raised concern about fuel demand.

Chinese stocks slid after the country's securities regulator warned that investors were in the grip of "panic sentiment" and the market showed signs of freezing up as firms had their shares suspended. ID:nL3N0ZN3U5

China is the world's second-largest oil consumer.

In the Greek debt crisis, euro zone members have given Athens until the end of the week to come up with a proposal for sweeping reforms in return for loans that would keep the country from crashing out of the single currency. ID:nL8N0ZN0LW

"Turmoil in China and Greece may put recent robust demand growth at risk," Morgan Stanley analysts said in a report.

"Investors have justifiable concerns about the outlook for both supply and demand going forward given current events."

Earlier on Wednesday, crude had gleaned some support from dragged-out negotiations in Vienna between Iran and six world powers.

The talks went beyond a self-imposed deadline as officials on both sides talked of important differences preventing a deal to lift sanctions and so allow more Iranian oil onto world markets.

"Those market participants who have been betting on a rapid Iranian return to the oil market are now likely to square their positions, which should lend short-term support to prices," said Carsten Fritsch, senior oil analyst at Commerzbank.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.