Oil slips on inventory data, OPEC complications:

  • Renewed oil price weakness chalked up to API data showing significant build of US crude inventories of 4.8M barrels vs predictions of 1.7M. Complications over OPEC output deal agreed last month also cited as big driver behind oil price weakness as Russia’s representative to OPEC said output cuts are not an option, while Iraq earlier this week expressed unwillingness to join the agreement. Iraq also claimed that because of its expensive campaign against Islamic State that it should receive some kind of exemption like what Nigeria and Libya may get. WSJhighlighted China customs data showing Iraq last month exporting more oil to China than Saudi Arabia, noting this is stark reminder to Riyadh about what would happen if Saudi Arabia cuts production while Iraq and Iran don’t. Focus now moves to DoE inventory data with expectations of +1.25M.