Oil prices fell yesterday after a new build in US crude stock levels put a global glut back in focus, cutting short a rally that pushed up prices by about 19 per cent over the past four sessions.
The rebound increased speculation prices may have hit a bottom, after a seven-month rout slashed oil futures by nearly 60 per cent and prompted energy firms to cut spending on new production.
But a report from industry group American Petroleum Institute showing US crude stocks rose more than six million barrels last week pushed prices down yesterday.
The fall in prices “makes perfect sense after the marked increase since Friday. A degree of reversal should be expected given stock builds globally”, said Gareth Lewis-Davies, senior oil strategist at BNP Paribas
Hans van Cleef, senior energy economist at ABN Amro bank in the Netherlands, said that investors were selling oil futures to take advantages of the recent rally.
“We’ve seen a steep recovery in the past few days, so some profit-taking doesn’t sound too strange in my view,” he said.
The dollar, the currency in which oil futures are traded, rose against a basket of currencies by 0.22 per cent to 93.8, making dollar traded commodities more expensive.
The outlook for oil demand has also been muddied by data showing China’s services sector grew at the slowest pace in six months in January.