Oil down on U.S. refinery maintenance, OPEC meet doubts

Reuters , Thursday 10 Mar 2016

Oil prices fell on Thursday, with U.S. crude retreating from three-month highs as refinery maintenance threatened to raise record inventories of crude and sources said an OPEC production freeze meeting was unlikely without Iran's participation.

An initial rally in the dollar .DXY after the European Central Bank cut its key lending rate to zero also pressured oil, although crude prices recovered from their lows as the euro EUR= rebounded on ECB comments that more cuts were unlikely.

Global oil benchmark Brent LCOc1 was down 85 cents at $40.22 a barrel by 10:44 a.m. EST, after a session low at $39.81.

U.S. crude CLc1 slid 57 cents to $37.72 per barrel, having recovered from an intraday low of $37.36.

Oil rallied as much as 5 percent on Wednesday, with U.S. crude hitting three-month highs of $38.51 a barrel, as a big gasoline inventory drawdown amid improving demand for energy overshadowed record high crude stockpiles.

But some analysts said on Thursday last week's gasoline stock build, which was triple expectations, could be partly due to the market transitioning from winter-grade to summer-grade motor fuel. They also said the U.S. refinery maintenance season could push crude stockpiles to even bigger highs.

"It looks like the market is still ignoring crude inventories," said Scott Shelton, energy broker at ICAP in Durham, North Carolina.

A meeting between oil producers to discuss a global pact on freezing production is unlikely to take place in Russia on March 20, sources familiar with the matter say, as OPEC member Iran is yet to say whether it would participate in such a deal.

"The idea that meeting may not happen at all is definitely weighing on the market," said Tariq Zahir, who mostly trades in U.S. crude oil spreads at Tyche Capital Advisors in New York.

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