USA oil inventories unexpectedly increase

Oil steadies near $57 a barrel before US crude inventory data

Oil steadies near $57 a barrel before US crude inventory data

Oil steadied in NY before weekly data on crude inventories in the USA, the world's biggest oil consumer.

Futures pared losses after government data showed gasoline and distillate inventories fell more than analysts anticipated, offsetting an unexpected rise in USA crude stocks as imports increased.

Futures were little changed after slipping 0.3 percent on Tuesday, the first decline in four sessions. Earlier in the day, ConocoPhillips announced a surprise 22% increase in next year's drilling budget, the latest signal that US output may not ebb any time soon. "We're on our way to set record crude oil production in 2018", said Andrew Lipow, president of Lipow Oil Associates in Houston. "Everybody is coming to the realization that shale is here to stay".

The Organization of the Petroleum Exporting Countries' 2017 World Oil Outlook showed the group predicts demand for its crude will rise more slowly than previously expected in the next two years, as higher prices from its supply policy stimulate output growth from rival producers. Just yesterday, OPEC itself said US shale output will continue to grow and may not max out until the middle of the next decade.

Meanwhile, analysts said investors also tended to take profit after oil prices posted solid gains earlier this week.

Data from the Energy Information Administration (EIA), published at 15:30 London time, showed that USA crude stocks had increased by 2.24m barrels in the week to 3 November.

As morning became afternoon on Wednesday, Brent futures fell six cents to $63.63 U.S. a barrel, while U.S. West Texas Intermediate (WTI) futures were down 19 cents at $57.01 U.S. a barrel.

Brent crude hit $64.65 earlier this week, its highest since mid-2015, as political tensions in the Middle East escalated after a sweeping anti-corruption purge in top crude exporter Saudi Arabia, which in turn has confronted Iran over the conflict in Yemen. The global benchmark crude traded at a premium of $6.20 to January WTI.

Crude imports rose 1.1 million barrels per day last week, while exports, by contrast, fell 1.3 million bpd from the previous week's record rate to just 869,000 bpd.

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