NEW YORK: Oil prices fell about 3 percent on Wednesday after US government data showed a 10th straight week in crude builds, but traders cautioned of volatility ahead of this week’s OPEC meeting from suggestions of any production cuts.
US crude oil inventories rose 1.2 million barrels last week, for a tenth straight week on higher imports and in spite of a jump in refining rates that also boosted stocks of gasoline and distillate, data from the Energy Information Administration (EIA) showed.
“It is another data point pointing to a continued glut in the US markets for oil as production declines remain stubborn even with oil prices hovering at current levels for a significant amount of time now,” Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland said.
Inventories at the Cushing, Oklahoma, delivery hub for US crude futures accounted for a third of the build, rising 428,000 barrels, the EIA reported.
Brent was down $1.24, or 2.8 percent, at $43.20 a barrel by 11:45 a.m. EST (1645 GMT).
US crude’s West Texas Intermediate (WTI) was off $1.30, or 3 percent, at $40.55.
Both benchmarks had raced into positive territory earlier on Wednesday.
Most traders expect OPEC at its Friday meeting in Vienna to endorse its decision from last year to pump oil vigorously to protect its market against non-members like US and Russia despite a global crude supply glut.
Only a few OPEC members, such as Venezuela and Iran, are hoping for output prices to stabilize crude prices which have tumbled from above $100 in June 2014 to just above $40 now.
“The market is vulnerable to short covering spikes if anything unexpected on OPEC comes out,” said Peter Donovan, broker at Liquidity Energy in New York.