Futures Movers: Oil tumbles lower as investors brace for another U.S. supply surprise

Oil futures fell another 1% early Wednesday, deepening losses that followed data showing a surprising buildup in U.S. inventories of both crude oil and gasoline.

December light, sweet crude CLZ7, -0.92%  on the New York Mercantile Exchange was recently down, 50 cents, or 0.9%, at $55.20 a barrel. January Brent LCOJ8, -0.81%   fell 54 cents, or 0.8%, to $61.66 a barrel.

Investors are waiting to discover whether the official Energy Information Administration data, due later Wednesday, will confirm the rise in the American Petroleum Institute’s reading of weekly U.S. inventories. A gain is seen as bearish for oil prices.

The API reported Tuesday that U.S. crude supplies climbed by 6.5 million barrels for the week ended Nov. 10, according to sources. It also showed a rise of 2.4 million barrels in gasoline stockpiles.

West Texas Intermediate crude and Brent oil prices each settled at the lowest level since at least Nov. 3 on Tuesday after the International Energy Agency cut its global crude-demand forecasts and warned of a boom for U.S. shale-oil production. WTI fell 1.9% to settle at $55.70 a barrel, while Brent lost 1.5% to settle at $62.21 a barrel.

Read Thomas Kee on: To make money in oil, listen to prices more than news

In its monthly report, the IEA cut its crude-demand outlook by 100,000 barrels a day for 2017 and 2018. However, on Monday, the Organization of the Petroleum Exporting Countries raised its own forecast for oil demand this year and next.

Oil prices are still hovering near two-year highs on optimism about a possible extension of the OPEC-led production cut agreement. However, investors are worried that oil rigs in the U.S. will increase their capacity and embark on new drilling, which could add fresh supply to the market.

Read: Is it time for investors to worry about rising oil prices?

The EIA is expected to report declines of 1 million barrels each for crude and gasoline inventories later on Wednesday, according to a survey of analysts polled by S&P Global Platts. They also forecast a fall of 2 million barrels in distillate supplies.

Last week’s EIA figures found U.S. crude supplies rose by 2.2 million barrels, for the week ended Nov. 3, contrary to a forecast for a drop of 2.7 million barrels.

“A second consecutive week of positive surprise could encourage a deeper correction in oil, given that all oil-positive news, such as OPEC’s plans to extend production cut and tighter market forecasts, have already been priced in,” said Ipek Ozkardeskaya, senior market analyst at LCG.com, in a note to clients.

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