Oil tumbles to $110 hit by stock build, Iran progress
London, October 17, 2013
Oil fell towards $110 a barrel on Thursday, as US inventory data pointed to a well-supplied market, and as investors took money off the table ahead of a deluge of data held back by a government shut-down in the United States.
Progress in talks over Iran's nuclear programme also helped pressure crude oil futures since an agreement with the West could bring more of its oil into the market.
Brent crude was down 41 cents to $110.18 a barrel by 0832 GMT. The November contract that expired overnight ended 90 cents higher, while the December contract settled up $1.17. US oil fell 51 cents to $101.78.
Prices pushed sharply higher on Wednesday after Washington's last-minute deal to avert a debt default.
"The anticipation of the US budget agreement rallied prices yesterday, but now the unexpectedly large US stock build in the API stats has pushed them back down again this morning," said Christopher Bellew, broker at Jefferies Bache.
Data from the American Petroleum Institute (API) showed crude inventories at the Cushing, Oklahoma, hub rose last week for the first time since early July, while overall US crude stockpiles also gained.
US crude stocks rose by 5.9 million barrels in the week to Oct. 11, the API data showed, more than double forecasts in a Reuters poll of analysts for a build of 2.2 million barrels.
Energy Information Administration data which is usually released on Wednesday has not been released this week due to the government shutdown in the United States. It was not expected on Thursday, and traders were awaiting guidance on when it would next be released.
Investors are waiting for delayed economic indicators to gauge the outlook for US demand.
"With the US Congress postponing the deadline and talks between Iran and Western countries progressing in a very, very positive atmosphere, oil prices could go lower," said Yusuke Seta, a commodity sales manager at Newedge in Tokyo.
"A clear direction for the market will emerge once we start to see the US data delayed due to the shutdown."
Ending weeks of political brinkmanship that had unnerved global markets, the Senate and House of Representatives passed the spending measures and President Barack Obama signed a bill to end the government shutdown.
But the deal offers only a temporary fix, funding the government until Jan. 15 and raising the debt ceiling until Feb. 7.
Investors are now focusing on the outcome of talks between Iran and world powers over Tehran's nuclear programme.
The US on Wednesday described two days of talks as the most serious and candid to date after Western diplomats said Iran hinted it was ready to scale back sensitive atomic activities to secure urgent sanctions relief.-Reuters