By December 29, 2016 Read More →

Oil prices steady as rise in U.S. inventory slows upswing

oil prices

Oil prices dropped slightly in thin trading on Thursday. Statoil photo by Ole Jørgen Bratland.

Oil prices stalled by slight increase in US crude stocks

By Catherine Ngai

NEW YORK, Dec 29 (Reuters) – Oil prices steadied on Thursday after a surprise increase in U.S. inventories helped stall an upward trend that has pushed global crude benchmarks to their highest levels since July last year.

U.S. light, sweet crude was down 16 cents at $53.90 by 10:21 a.m. ET (1521 GMT) while North Sea Brent crude was up 12 cents at $56.34 a barrel.

Traded volumes were thin with many investors away for year-end holidays, although the expiry of the front-month February ICE Brent contract on Thursday could generate some activity. U.S. distillate and gasoline futures expire on Friday, which could add to price swings as well, analysts noted.

“The petroleum markets are mixed in light-volume trade amid a general wait for fresh fundamental news that might push prices out of their established ranges,” Tim Evans, an energy futures specialist at Citi Futures, said in a note.

Both crude oil benchmarks have made big gains this month since OPEC and other producers agreed to curb production in an attempt to balance an over-supplied fuel market.

“The market is in good shape although it might fail to make significant advances this year,” said analyst Tamas Varga at London brokerage PVM Oil Associates. “If that is the case the uptrend should continue in early January.”

“Either way, the odds are still on higher numbers.”

The U.S. Energy Information Administration will release its closely watched weekly inventory data at 11 a.m. (1600 GMT) on Thursday. The data had been postponed for a day due to the federal holiday on Monday.

Data released by industry group the American Petroleum Institute (API) late on Wednesday showed a 4.2 million barrel increase in U.S. crude stocks in the week to Dec. 23.

Analysts polled by Reuters before the report had forecast on average that inventories would decline by 2.1 million barrels.

But the overall trend appeared to be upwards with oil producers committed to agreed output cuts.

A committee of the Organization of the Petroleum Exporting Countries and non-OPEC producers will meet in Vienna on Jan. 21-22 to discuss compliance with the production agreement, Kuwaiti oil minister Essam Al-Marzouq told state news agency KUNA.

(Additional reporting by Christopher Johnson in London and Mark Tay in Singapore; editing by David Clarke and Chizu Nomiyama)

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