© Reuters. Oil prices fall on indications of a big U.S. supply jump Investing.com – West Texas Intermediate oil futures fell sharply on Wednesday, amid speculation weekly supply data due later in the session will show U.S. crude inventories rose last week.
After markets closed Tuesday, the American Petroleum Institute, an industry group, surprised market participants and said that U.S. oil inventories in the week ended December 25, disappointing expectations for a decline of 2.2 million barrels.
The U.S. Energy Information Administration will release its own at 10:30AM ET Wednesday.
for delivery in February on the New York Mercantile Exchange slumped 67 cents, or 1.78%, to trade at $ 37.20 a barrel during European morning hours. , U.S. oil futures jumped $ 1.06, or 2.88%.
Trading volumes are expected to remain light in the final few days of the year, reducing liquidity in the market which could result in exaggerated moves.
Nymex oil futures are down nearly 30% in 2015 amid worries over ample domestic supplies. Prices fell to $ 34.29 earlier this month, the lowest since February 2009.
Elsewhere, on the ICE Futures Exchange in London, for February delivery shed 25 cents, or 0.66%, to trade at $ 37.36 a barrel. London-traded Brent futures tacked on $ 1.17, or 3.19%, on Tuesday.
Brent oil prices are on track to post an annual decline of 34% this year, as oversupply concerns dominated market sentiment for most of the year. Prices slumped to $ 35.98 on December 22, a level not seen since July 2004.
Oil futures have fallen sharply this month after the Organization of the Petroleum Exporting Countries failed to agree on output targets to reduce a glut of oversupply on global energy markets.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by OPEC last year not to cut production in order to defend market share.
Meanwhile, Brent flipped back to a premium over the West Texas Intermediate crude contract, after U.S. oil surpassed prices on the global market for the first time in four years last week.
U.S. crude has been firmer relative to Brent recently, on signs that the U.S. oil market is likely to grow tighter following Congress’ decision to lift a 40-year old ban on domestic oil exports, while a global glut gets worse in 2016 due to soaring production in Saudi Arabia and Russia.
Oversupply issue will be exacerbated further once Iran returns to the global oil market early next year after western-imposed sanctions are lifted. Analysts say the country could quickly ramp up production by around 500,000 barrels, adding to the glut of oil that has sent prices tumbling.
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WTI oil futures down 2% forward of weekly provide report
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