Oil Trades Near a Three-Week Low Amid Plentiful U.S. Supplies
Oil traded near the lowest close in almost three weeks in New York after U.S. government data showed crude stockpiles at the highest seasonal level in more than 20 years.
Futures were little changed after falling 6.2 percent the previous three sessions. U.S. inventories increased by 2.28 million barrels last week for a second straight gain, according to the Energy Information Administration. The market is saturated with stored crude and Saudi Arabia doesn’t see any need to produce at full capacity, Energy Minister Khalid Al-Falih told Al-Arabiya television as OPEC members prepare to meet this month.
Oil rose 7.5 percent in August amid speculation that OPEC talks in Algiers may lead to an agreement to manage the market. A cap on production would be positive, Al-Falih said in an interview last week, while ruling out an output cut. A freeze deal between members of the Organization of Petroleum Exporting Countries and other producers was proposed in February but a meeting in April ended with no final accord.
“Oil prices took another tug downwards yesterday” as “oil inventories continue to build,” said Michael Poulsen, an analyst at Global Risk Management Ltd. “Voices remain mixed on a potential agreement on an output freeze later this month.”
West Texas Intermediate for October delivery advanced as much as 38 cents to $45.08 a barrel on the New York Mercantile Exchange and was at $44.76 as of 10:08 a.m. London time. The contract dropped 3.6 percent to $44.70 on Wednesday, the biggest decline since Aug. 1. Total volume traded Thursday was 28 percent below the 100-day average.
Brent for November settlement was unchanged at $46.89 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a $1.53 premium to WTI for the same month. The October Brent contract fell $1.33 to expire at $47.04 on Wednesday.
U.S. crude stockpiles increased to 525.9 million barrels through Aug. 26, the EIA reported Wednesday. Crude production dropped for a second week to 8.49 million barrels a day, while gasoline inventories declined by 691,000 barrels to 232 million. Supplies at the Cushing hub fell to 63.9 million.
- U.S. weekly fuel demand was overstated in the first half of the year as the EIA under-counted exports, the agency said on its website.
- Russian Energy Minister Alexander Novak said he sees no need for oil-producing nations to impose an output cap given current price levels.
- BP Plc restarted its Atlantis field in the Gulf of Mexico as Tropical Storm Hermine moved away from area, according to a person familiar with the situation.
- The official factory gauge for China, the world’s second-biggest oil consumer, unexpectedly rose last month to the highest level in almost two years.