Brent declines after EIA reports surprise build in US crude stocks

The front-month ICE Brent contract has declined by $3.04/bbl on the day, to trade at $100.63/bbl at 09.00 GMT.

IMAGE: Oil pumpjacks. Getty Images

Upward pressure:

Brent crude’s price has felt some upward pressure after US President Donald Trump rejected claims of easing economic sanctions on Tehran by releasing frozen Iranian funds.

The US President also threatened that he “may blow up Iran,” if a deal is not reached soon.

The global oil market has become increasingly familiar with Trump’s maximalist rhetoric, where aggressive warnings routinely trigger sharp knee-jerk spikes in Brent’s price even as participants weigh the actual likelihood of an all-out war.

Downward pressure:

Brent crude’s price has moved lower after the US Energy Information Administration (EIA) reported a build in US crude stocks.

Commercial US crude oil inventories increased by around 922,000 bbls to 427.3 million bbls in the week ending 25 September, according to data from the EIA.

Market analysts expected an inventory draw of 455,000 b/d instead, two analysts from ING Bank noted.

A build in US crude stocks typically indicates lower demand for oil and can put some downward pressure on Brent's price.

Yesterday, the American Petroleum Institute (API) reported a 1.02 million-bbl rise in US crude stocks during the same week.

“Bearish sentiment was reinforced by the latest EIA data, which showed US commercial crude inventories rising by 922k barrels [922,000 bbls] last week,” ING Bank’s analysts added.

By Aparupa Mazumder

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