Oil retreats after OPEC deal rally on US supply gain

Bloomberg

Oil retreated from the highest close since July 2015 as focus shifted to expanding US crude stockpiles after OPEC and other producing nations agreed to cut output to stabilize the market.
Futures slid as much as 1.7 percent in New York after climbing 6.5 percent over the previous four sessions. US inventories rose by 4.68 million barrels last week, the industry-funded American Petroleum Institute was said to
report. Government data on Wednesday is forecast to show supplies fell.
Oil markets will swing into deficit in
the first half of 2017 as producers
curb supply, according to the International Energy Agency, earlier than its previous forecast.
Oil has gained about 16 percent since the members of the Organization of Petroleum Exporting Countries agreed Nov. 30 to trim output for the first time in eight years. The deal reached over the weekend in Vienna to secure supply cuts from 11 non-OPEC producers including Russia means the agreement encompasses countries that produce about 60 percent of the world’s crude. US supplies are at the highest seasonal level in more than three decades, weekly government data show.
“The weekly oil stocks data from the American Petroleum Institute showed a whopping build,” said Michael Poulsen, an analyst at Global Risk Management Ltd. “The recent oil price increase could trigger additional US shale output as opening the taps becomes profitable again on higher prices.” West Texas Intermediate for January delivery lost as much as 88 cents to $52.10 a barrel on the New York Mercantile Exchange, and was at $52.37 at 10:20 a.m. London time. The contract gained 15 cents to close at $52.98 on Tuesday.
Total volume traded was about 9 percent below the 100-day average. Brent for February settlement fell as much as 83 cents, or 1.5 percent, to $54.89 a barrel on the London-based ICE Futures Europe exchange.
The contract rose 3 cents to $55.72 a barrel on Tuesday, the highest settlement since July 2015. The global benchmark crude traded at a premium of $1.82 to WTI.
US gasoline stockpiles increased by 3.91 million barrels last week, the API reported Tuesday, according to a person familiar with the figures. Nationwide crude inventories are forecast to have decreased by 1.5 million barrels, according to the median estimate in a Bloomberg survey before an Energy Information Administration report Wednesday.
The agreement to curb output will stabilize markets, OPEC Secretary General Mohammad Barkindo said in Washington. The oil market has started to recover and the process will take some more months, Saudi Arabian Oil Minister Khalid Al-Falih told reporters in Dhahran. Russian companies including Gazprom PJSC signed a raft of initial agreements with Iran that could lead to contracts worth billions of dollars after the easing of sanctions on the Persian Gulf nation. Kuwait will provide its full January oil supplies to at least two Asian buyers, according to customers of the OPEC producer.