Oil prices fall sharply in early Wednesday trading as investors react to data showing a huge market surplus. File photo by Monika Graff/UPI |
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NEW YORK, Oct. 26 (UPI) -- With OPEC sending messages lacking details, markets reacted to data showing a sizeable build in supplies and sent oil prices in retreat early Wednesday.
Crude oil prices declined for a third straight day as the conversation surrounding a proposal from the Organization of Petroleum Exporting Countries fades into the background. Oil prices turned lower Tuesday after S&P Global Platts said it expected U.S. crude oil storage levels to increase by 400,000 barrels over the previous week.
Late Tuesday, industry data from the American Petroleum Institute reported stockpiles increased by 4.8 million barrels for the week ending Oct. 21. With two reports indicating sustained supply-side pressures, oil prices moved lower to start the trading day Wednesday.
The price for Brent crude oil was down 2 percent to open in New York at $49.74 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, was lower than the previous close by 1.9 percent to start the day at $49 per barrel.
Prices could be influenced later in the morning after the U.S. Energy Information Administration releases its official figures on crude oil inventories in the country. A build suggests a market favoring the supply side, while a draw would show demand is catching up.
Some energy companies out with earnings for the third quarter said the market was starting to show signs of balancing.
Olivier Jakob, the managing director at Swiss oil-market research group Petromatrix, said in an emailed report that data on storage levels may be fluid given recent outages from pipeline infrastructure in the United States. Two pipelines associated with the central U.S. storage hub in Cushing, Okla., reported problems so far this month.
OPEC in late September offered a proposal to control production levels in an effort to stimulate oil prices. Markets in the following weeks reacted more to rumors than concrete data and Jakob said that, while OPEC is still making headlines, "without new content," traders are reverting back to fundamentals.
