Oil retreats after Opec deal rally on US supply gain

Hong Kong - Oil retreated from the highest close since July 2015 as focus shifted to expanding US crude stockpiles after the Organisation of Petroleum Exporting Countries (Opec) and other producing nations agreed to cut output to stabilise the market.

Futures slid as much as 1.7% in New York after climbing 6.5% over the previous four sessions.

US inventories rose by 4.68 million barrels last week; the industry-funded American Petroleum Institute was said to report.

Government data on Wednesday is forecast to show supplies fell.

Oil markets will swing into deficit in the first half of 2017 as producers curb supply, according to the International Energy Agency (IEA), earlier than its previous forecast.

Oil has gained about 16% since the members of the Opec agreed in November 30 to trim output for the first time in eight years.

The deal reached over the weekend in Vienna between the group and 11 non-Opec producers including Russia encompasses countries that produce about 60% of the world’s crude.

US supplies are at the highest seasonal level in more than three decades, weekly government data show.

"There is a large crude inventory and that acts as a cap on prices in the short term," said Ric Spooner, a chief market analyst at CMC Markets in Sydney.

"The $55 to $60 a barrel area may prove to be a bit of a headwind, that’s the sort of level that could attract increased production on sustained prices."

West Texas Intermediate for January delivery lost as much as 88 cents to $52.10 a barrel on the New York Mercantile Exchange, and was at $52.37 at 8:12 Hong Kong time.

The contract gained 15 cents to close at $52.98 on Tuesday.

Total volume traded was about 2.4% below the 100-day average.

US stockpiles

Brent for February settlement fell as much as 83 cents to $54.89 a barrel on the London-based ICE Futures Europe exchange. The contract rose 3 cents to $55.72 a barrel on Tuesday, the highest settlement since July 2015.

The global benchmark crude traded at a premium of $1.85 to WTI.

US gasoline stockpiles increased by 3.91 million barrels last week, the API reported Tuesday, according to a person familiar with the figures.

Nationwide crude inventories are forecast to have decreased by 1.5 million barrels, according to the median estimate in a Bloomberg survey before an Energy Information Administration report on Wednesday.

Oil-market news:

The agreement to curb output will stabilize markets, Opec Secretary General Mohammad Barkindo said in Washington.

Russian companies including Gazprom PJSC signed a raft of initial agreements with Iran that could lead to contracts worth billions of dollars after the easing of sanctions on the Persian Gulf nation.

Kuwait will provide its full January oil supplies to at least two Asian buyers, according to customers of the Opec producer.