Brent fell to around $70 a barrel on Wednesday while US crude rose to above $67 after data showed a tumble in US crude inventories even as a report suggested Saudi Arabia expects still lower prices for oil. The US government's Energy Information Administration (EIA) said crude stocks fell by 3.7 million barrels last week, versus analysts' expectations for a build of 1.3 million barrels. The data pushed up crude prices on the New York Mercantile Exchange.
The Wall Street Journal reported that Saudi Arabia, Opec's biggest producer, believed oil prices could stabilise at around $60 a barrel. The Journal report, citing people familiar with the situation, pushed Brent lower. Exxon Mobil's CEO Rex Tillerson, meanwhile, told CNBC in an interview the firm's decision to invest in America's shale oil sector was made by ensuring it could withstand prices ranging from $120 a barrel to $40.
"Between the Journal report of the Saudis accepting $60 oil and Rex Tillerson saying Exxon can be tested to as low as $40, I guess the market has to decide which low price level it's comfortable with," said John Kilduff, partner at New York energy hedge fund Again Capital. Oil markets have been volatile since last week's Opec meeting, where Saudi Arabia blocked calls by smaller oil producers to cut production so that crude prices could rise. Oil traders have sought a price floor for crude since a near 40-percent tumble in June that has brought Brent down from a high above $115.
On Wednesday, Brent was down 16 cents at $70.38 a barrel at 1:07 pm EST (1805 GMT), after touching a session low at $70.10. It climbed nearly $1 earlier to an intraday high of $71.46. NYMEX crude futures had risen 35 cents to $67.23, touching a session peak at $68.23. The EIA said although crude inventories fell last week, gasoline and distillate stocks rose, a bearish factor.
"This storage data won't make much difference to the market as the speculators already know which direction they are ultimately going: down," said Santiago Diaz, futures broker at INTL FC Stone in Miami. "We may get some bullish sentiment or a break when they come in to cover shorts like today, but otherwise, they'll be selling."