US oil prices fell on Thursday after an industry report showed a surprise increase in the country’s crude inventories, while Brent futures recovered some ground lost in early trade.

US benchmark West Texas intermediate (WTI) futures were down 27 cents, or 0.5 per cent, at $53.79 per barrel as of 0740 GMT after settling 16 cents higher at $54.06 in the previous session.

Brent futures were 3 cents, or 0.05 per cent, lower at $56.19 a barrel, paring initial losses in early trade. The contract opened 21 cents below Wednesday’s settlement of $56.22 per barrel.

Trade is expected to remain thin for the rest of the week as most investors are away for year-end holidays, although the expiry of the front-month February ICE Brent contract on Thursday could see some activity in the contract.

“Most investors have vested interest to keep prices high because it looks nice on the balance sheet when books close at the end of the year,” said a Singapore-based trader.

Data released by the American Petroleum Institute (API) late on Wednesday showed a 4.2 million barrel build in US crude stocks in the week to December 23, while analysts polled ahead of the weekly inventory reports had forecast, on average, that inventories would decline 2.1 million barrels.

Meanwhile, a committee of Opec (Organisation of the Petroleum Exporting Countries) and non-Opec producers responsible for monitoring compliance with a production cut agreement will meet in Vienna on January 21-22, Kuwaiti oil minister Essam Al Marzouq told state news agency Kuna, in a sign that the output cut deal is likely to be adhered to.

“Brent will be more positively impacted by the Opec and non-Opec cuts should the agreed reductions be largely adhered to over the next six months,” said Philips Futures’ investment analyst Jonathan Chan.

“WTI-Brent spread will continue to widen should the Opec and non-Opec market rebalancing initiative works out and North American Shale production continue to pick up,” Chan added.

source : gulfnews