MW: Oil falls to six-week low as traders brace for inventory data
API shows unexpected rise; investors await government report
By Kate Gibson, MarketWatch
SAN FRANCISCO (MarketWatch) -- Crude-oil futures fell to a six-week low Wednesday, after a trade group report showed a surprise rise in U.S. crude inventories last week, sparking fears that closely watched government data will show the same bearish stockpile build.
Crude-oil futures for September delivery fell $1.64, or 2.2%, to $74.12 a barrel on the New York Mercantile Exchange. A close near that level would be the lowest since early July.
The contract had rebounded Tuesday from a six-session losing streak, adding 53 cents to end at $75.77 a barrel.
"Today's weekly [Energy Information Administration] data will no doubt influence subsequent price action, with our expectation for 1.1 [million barrel] crude build," analysts at J.P. Morgan said in a note to clients Wednesday.
It would be "wrong to paint a universally bleak economic picture," as emerging-market economies continue to perform strongly, the analysts added, citing India as an example.
"Nevertheless, growing concerns about developed-market economies is arguably reflected in diminishing risk appetite, and this continues to weigh on oil prices," they said.
The American Petroleum Institute said late Tuesday that crude inventories climbed nearly 5.9 million barrels last week, countering expectations for a drop in supply.
The increase proved "much stronger than expected and underlined concerns that a slowdown in economic activity is hampering demand," noted analysts at Action Economics.
The Energy Department's EIA is scheduled to release its weekly supply data at 10:30 a.m. Eastern.
Analysts polled by Platts expect a decline of 2.25 million barrels for oil inventories in the week ended Aug. 13. The analysts expect gasoline stockpiles to fall by 1.6 million, and stocks of distillates, which include diesel and heating oil, to drop by 1.4 million.
