NEW YORK: Oil prices slipped on Wednesday, Sept 22'' after a government report showed a surprise rise in U.S. oil stocks, offsetting earlier support stemming from expectations that the Federal Reserve is prepared to pump billions of dollars into the weak economy.
Crude inventories rose despite the shutdown of a major pipeline that carries Canadian crude into the United States.
Analysts had expected the shutdown of the Enbridge line would cause inventories to fall, and the unexpected build dragged down oil prices, which have fallen in six of the last seven sessions.
Combined U.S. commercial crude and refined products inventories hit a record 1.144 billion barrels, the highest level since the EIA began collecting weekly data in 1990.
U.S. crude for November delivery fell 26 cents, or 0.35 percent, to settle at $74.71 per barrel, having traded from $73.84 to $76. ICE Brent crude for November fell 47 cents to settle at $77.95 a barrel.
The EIA inventory report said U.S. crude stocks rose 970,000 barrels in the week to Sept. 17, against a forecast for stocks to be down 1.9 million barrels.
The report also showed gasoline stocks rose unexpectedly and that distillate stocks increased slightly more than forecast.
The EIA report followed industry data from the American Petroleum Institute released late Tuesday, which painted a similar picture.
"When the API data came out yesterday, a lot of people were skeptical and wanted to wait for the DOE numbers but these aren't bullish either," said Tom Bentz, broker at BNP Paribas Commodity Futures Inc in New York.
"With the Enbridge outage last week, it is surprising to see a build in inventories," Bentz added
DOLLAR BROADLY WEAKER
Ahead of the inventory report, crude oil prices were lifted more than $1 to $76 a barrel by the broadly weaker dollar.
The dollar's slide followed Federal Reserve comments expressing greater concern about sluggish U.S. growth and low levels of inflation in a statement that many investors took as opening the door wider to pumping more dollars into the economy.
Expectations of further monetary easing sent the dollar index to a six-month low and the greenback to a five-month low against the euro.
A weaker dollar can lift dollar-denominated oil prices because it improves the purchasing power of consumers using other currencies and lessens the value of greenbacks received by producers.
"The weaker dollar reflects the Fed statement and I expect more liquidity will be supportive for commodities," said Christophe Barret, oil analyst at Credit Agricole in London.
Gold hit a record high for a fifth straight session and was near $1,300 an ounce after the Fed said it was ready if needed to add more stimulus and that inflation was running below where it would like it to be.
Also seen as supportive and helping limit crude oil losses was the prospect of threatening tropical weather. The U.S. National Hurricane Center on Wednesday raised to 60 percent the chance that a tropical depression could form in the Caribbean Sea over the next 48 hours.
While most computer weather models continued to forecast the system would hit Central America and miss Gulf of Mexico energy operations, one computer model on Wednesday showed the system might turn northwest toward the Gulf. - Reuters
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Crude inventories rose despite the shutdown of a major pipeline that carries Canadian crude into the United States.
Analysts had expected the shutdown of the Enbridge line would cause inventories to fall, and the unexpected build dragged down oil prices, which have fallen in six of the last seven sessions.
Combined U.S. commercial crude and refined products inventories hit a record 1.144 billion barrels, the highest level since the EIA began collecting weekly data in 1990.
U.S. crude for November delivery fell 26 cents, or 0.35 percent, to settle at $74.71 per barrel, having traded from $73.84 to $76. ICE Brent crude for November fell 47 cents to settle at $77.95 a barrel.
The EIA inventory report said U.S. crude stocks rose 970,000 barrels in the week to Sept. 17, against a forecast for stocks to be down 1.9 million barrels.
The report also showed gasoline stocks rose unexpectedly and that distillate stocks increased slightly more than forecast.
The EIA report followed industry data from the American Petroleum Institute released late Tuesday, which painted a similar picture.
"When the API data came out yesterday, a lot of people were skeptical and wanted to wait for the DOE numbers but these aren't bullish either," said Tom Bentz, broker at BNP Paribas Commodity Futures Inc in New York.
"With the Enbridge outage last week, it is surprising to see a build in inventories," Bentz added
DOLLAR BROADLY WEAKER
Ahead of the inventory report, crude oil prices were lifted more than $1 to $76 a barrel by the broadly weaker dollar.
The dollar's slide followed Federal Reserve comments expressing greater concern about sluggish U.S. growth and low levels of inflation in a statement that many investors took as opening the door wider to pumping more dollars into the economy.
Expectations of further monetary easing sent the dollar index to a six-month low and the greenback to a five-month low against the euro.
A weaker dollar can lift dollar-denominated oil prices because it improves the purchasing power of consumers using other currencies and lessens the value of greenbacks received by producers.
"The weaker dollar reflects the Fed statement and I expect more liquidity will be supportive for commodities," said Christophe Barret, oil analyst at Credit Agricole in London.
Gold hit a record high for a fifth straight session and was near $1,300 an ounce after the Fed said it was ready if needed to add more stimulus and that inflation was running below where it would like it to be.
Also seen as supportive and helping limit crude oil losses was the prospect of threatening tropical weather. The U.S. National Hurricane Center on Wednesday raised to 60 percent the chance that a tropical depression could form in the Caribbean Sea over the next 48 hours.
While most computer weather models continued to forecast the system would hit Central America and miss Gulf of Mexico energy operations, one computer model on Wednesday showed the system might turn northwest toward the Gulf. - Reuters
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