Oil Down As Dollar Offsets China Move; Glut Hits Prompt US Crude
"It's terrible price action considering China's rate cut," said Scott Shelton, energy broker and commodities specialist for ICAP in Durham, North Carolina. "It shows this is not the solution the market is seeking for crude demand."
A stubborn global oil glut, partly due to record pumping by the biggest producers in OPEC, has prevented crude prices from staging a meaningful rebound despite a few sharp intermittent rallies since early September.
Growing U.S. crude stockpiles have also added more pressure on WTI than on Brent, with the transatlantic spread <CL-LCO1=R> settling at its widest in two weeks at $3.33 a barrel.
The front month U.S crude contract also hit its deepest discount in five months to the nearby contract <CL-1=R> as weak spot prices pushed traders to store more crude for later delivery.
The discount, known as contango, has been widening since Wednesday and hit 91 cents, its deepest since May 15.
U.S crude inventories have risen for four straight weeks amid reduced refining activity during the autumn maintenance season.
"We've had massive builds. The whole spread curve in WTI is getting weaker, encouraging people to put oil into storage," said Tariq Zahir, trader in crude oil spreads at Tyche Capital Advisors in Laurel Hollow, New York.
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