Brent down as US crude build eclipses output freeze plan

Brent settled lower after data showing US crude inventories rose to record highs overshadowed production freeze plans by oil major producers that had sharply boosted the market this week.

Brent, the global benchmark for crude, settled down 22 cents at $34.28 a barrel, having risen more than $1.20 before the data. It had gained a total of more than $4 earlier.US crude settled up by a modest 11 cents at $30.77 a barrel, after an earlier peak at $31.98.

The US government’s Energy Information Administration (EIA) said crude stockpiles rose 2.1 million barrels last week, to a peak of 504.1 million barrels in the third week of hitting record highs in past month. The EIA also cited record high gasoline inventories and higher stocks of distillates that include heating oil and diesel.

Oil prices had risen more than 14 percent over the last three days after a plan by Saudi Arabia and Russia, endorsed without commitment by Iran to freeze oil output at January’s highs.

The Saudi-Russian production freeze plan, also joined by Qatar and Venezuela, is the first such deal in 15 years between the Organization of the Petroleum Exporting Countries and non-OPEC members. But following Iran’s failure to commit to a production freeze, Iraq’s oil minister signalled Iraq would wait for more cooperation between producers before committing to freeze its own production.

Iran is the major obstacle to the deal, having pledged to increase output sharply to regain market share lost during sanctions, which were lifted last month after an agreement with world powers, allowing Tehran to resume selling oil freely in international markets.

While oil producers hope their efforts will end the 20-month long selloff that brought crude down from above $100 a barrel in mid-2014, the only certainty ahead could be choppier markets.