Oil prices fell on Wednesday after data from an industry group showed a larger-than-expected build in U.S. crude inventories last week, fanning worries over global oversupply, even as a slightly weaker dollar provided some support.
Brent crude for December delivery had fallen 14 cents to $48.57 a barrel by 1.03 a.m. ET after settling up 10 cents in the previous session.
U.S. crude for December delivery dropped 27 cents at $46.02 a barrel after settling up one cent at $46.29. The November contract, which expired on Tuesday, finished down 34 cents at $45.55 per barrel.
“Concerns over the potential for a further build (in U.S. crude stocks) in official data (were driving prices lower)”, said Michael McCarthy, chief market strategist at Sydney’s CMC Markets.
“The low volumes and market moves are reflecting that,” he said.
Industry data showed U.S. commercial crude stocks climbed by a larger-than-expected 7.1 million barrels to 473 million barrels in the week to Oct. 16, the American Petroleum Institute said on Tuesday. Analysts had expected a 3.9 million barrels increase.
The U.S. Energy Information Administration is due to release official inventory data later on Wednesday, which is expected to show a build in crude stocks for a fourth straight week.
The increase was due to low refinery utilization which should continue as a result of continuing refinery maintenance, Singapore’s Phillip Futures said in a note on Wednesday.
“The more interesting figure to focus on would be US crude oil production which should continue to drop. Another drop this week would likely cause production to drop below 9 million barrels per day (bpd) which would be taken as a bullish sign,” the note said.
China’s crude imports will continue to grow over the next five years at an average annual rate of 3.2 percent, BMI Research said in a report on Wednesday.
“We forecast China’s crude oil imports will climb steadily over the next five years, from 6.6 million bpd in 2015 to 7.7 million bpd by 2020. This will be a result of higher domestic refinery run rates and continued strategic stockpiling activities, which will boost demand for crude imports,” the report said.
China’s implied oil demand fell slightly in September to 10.13 million bpd, down 0.1 percent from a year ago, according to Reuters calculations based on preliminary government data.
Investors are also eyeing the outcome of a meeting of oil experts later on Wednesday involving members of the Organisation of the Petroleum Exporting Countries and non-OPEC oil producers.
With ex-Soviet oil producers, including Russia and Azerbaijan, unlikely to bow to pressure to reduce output in an effort to lift prices there is little chance of a deal between the two sides, industry experts said.