Oil prices diverge after US energy report

25th September 2013, Comments 0 comments

Global oil prices diverged on Wednesday as investors digested an unexpected surge US crude stockpiles, indicating weak demand in the world's top crude consumer, analysts said.

New York's main contract, West Texas Intermediate (WTI) for delivery in November fell 14 cents to $102.99 a barrel, reversing earlier gains.

Brent North Sea crude for November delivery rose 55 cents to $109.19 per barrel.

The US government's Energy Information Administration (EIA) said Wednesday that American crude reserves soared by 2.6 million barrels in the week ending September 20, as refiners curbed demand and imports rose.

That contrasted with market expectations for a drop of 900,000 barrels, according to analysts polled by Dow Jones Newswires.

"The EIA's inventories ... showed stockpiles increased by a good 2.6 million barrels last week, easily disappointing expectations," said analyst Fawad Razaqzada at trading firm GFT.

"Thus, all else remaining the same, WTI should ease further in the coming days."

Dealers are also eyeing a possible thawing of ties between the United States and oil producer Iran.

During an address to the United Nations Tuesday, US President Barack Obama pushed for pursuing diplomacy with Iran's new government, but called on Tehran to be transparent about its nuclear programme.

Iran's economy has been crippled by a series of UN and US sanctions aimed at bringing an end to its nuclear programme, which the West claims is being used to develop nuclear weapons. Iran denies the assertion.

"Fresh talks for diplomacy over Iran's nuclear programme could see the Western imposed restrictions on Iran's oil exports eased in the near term as both Iran's President Hassan Rouhani, and Obama have expressed a commitment to engage in meaningful and time-bound discussion," said Sucden analyst Kash Kamal.

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© 2013 AFP

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