Oil prices extend losses on U.S. oil inventory, manufacturing data

By Keith Wallis
SINGAPORE, Sept 2 (Reuters) - Oil prices fell as much as
over 2 percent in early Asian trade on Wednesday, as a stronger
than expected build in U.S. crude oil stocks and weaker U.S.
manufacturing data fuelled a rout in prices that started in the
previous session.
Brent and U.S. crude finished around 8 percent lower on
Tuesday to end a 25-percent three-session surge, the largest
three-day gain since 1990.
That came after oil prices dropped to their lowest level in
6-1/2 years last week.
This rollercoaster volatility could continue especially if
there are similar wild swings in the equity markets, said Ric
Spooner, chief market analyst at Sydney's CMC Markets.
"Any change in sentiment tends to be amplified. Any change
in direction in the oil markets has the potential to be risk
driven by what's going on in the equity markets," he said.
U.S. stocks fell nearly 3 percent on Wall Street on Tuesday,
with all three major U.S. equity indexes in negative territory
for the year so far. ID:nL1N11726X
Oil prices retreated after U.S. crude stocks surged by 7.6
million barrels to 456.9 million in the week to Aug. 28, data
from industry group the American Petroleum Institute showed on
Tuesday. Analysts in a Reuters poll expected just a 32,000
barrel gain. ID:nZXN04JD00
Official inventory data will be released by the U.S. Energy
Information Administration later on Wednesday.
Weaker than expected U.S. manufacturing data from the
Institute for Supply Management (ISM), which showed growth in
August slowed to its lowest level since May 2013, also weighed
on oil prices in the Asia timezone. ID:nL1N1170Z1
Upcoming U.S. data, including oil stocks, factory orders and
employment figures, will be important in giving oil markets
direction, Spooner said.
Brent crude LCOc1 for October delivery had dropped 64
cents to $48.90 a barrel, or 1.3 percent, as of 0035 GMT after
falling $4.59, or 8.48 percent, in the previous session.
The benchmark fell to $48.48 a barrel immediately after
trading started on Wednesday.
U.S. crude CLc1 for October delivery declined 79 cents, or
1.7 percent, to $44.62 a barrel after ending down $3.79, or 7.7
percent, in the previous session. It dropped to $43.86 a barrel
shortly after the market opened.
Oil prices are expected to end the week down, but should be
above last week's lows, Spooner said.
Crude prices have fallen too far, too fast and should
recover gradually over the next year, with Brent averaging
$62.30 a barrel in 2016 and U.S. crude $57 a barrel, a Reuters
poll of analysts showed on Tuesday. ID:nL4N1124ES