OIL FUTURES: Crude slows as US sees stock build

Crude oil prices reached a ceiling during morning trade in Europe Oct. 27, dropping from bullish fundamentals after the US reported a larger-than-expected stock build.

At 10:07 AM (0907 GMT) London time, the ICE December Brent futures contract was $1.15/b (1.33%) lower from the previous close at $85.25/b, while the NYMEX December light sweet crude contract was $1.48/b (1.75%) lower at $83.17/b.

"This morning, the energy complex is succumbing to negative pressures following a bearish API report concerning US oil stocks," Stephen Brennock of PVM Oil Associates said Oct. 27.

A larger-than-expected stock build showed US crude inventories increasing 2.3 million barrels for the week ended Oct. 15, according to API's weekly report on Oct. 26. The economists were, however, expecting a build of about 1.7 million barrels.

The API data also showed that gasoline inventories rose 530,000 barrels last week, and distillate stocks increased 986,000 barrels.

"Analysts suggest the prices are starting to look overbought and investor profit taking is largely expected," one analyst said Oct. 27.

However, some analysts continue to cite the bullish nature of the complex as a cautious increase in OPEC+ oil production tilts the supply-demand balance.

"Oil companies in western countries are under pressure to lower their carbon emissions, which will doubtless make them less keen to invest in fossil fuels such as oil," Carsten Fritsch of Commerzbank said.

"The dependency on OPEC+ is therefore likely to increase, as is its market power. This points to higher oil prices in the longer term than had recently been envisaged."