WTI trades near 3-day low as supplies seen rising
2014-10-28 12:13:23
West Texas Intermediate traded near the lowest closing price in three days amid speculation crude stockpiles increased to the highest level since July in the U.S., the world’s biggest oil consumer. Brent fell in London.
Futures were little changed in New York after falling just 1 cent yesterday. Crude inventories are forecast to have expanded by 3.8 million barrels to 381.5 million last week, a Bloomberg News survey showed before government data tomorrow. OPEC is unlikely to reduce its production target when it meets next month, Mohsen Qamsari, a director for international affairs at National Iranian Oil Co., said yesterday according to the Oil Ministry’s news service.
“It’s clear that the supply situation is at a record in terms of stockpiles, so it’s going to take some time to clear that excess,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone today. With OPEC, “the expectation is that they will announce a cut, but the question is whether or not they will deliver on them.”
WTI for December delivery was at $81 a barrel in electronic trading on the New York Mercantile Exchange at 8:45 a.m. London time, unchanged from yesterday, which was the lowest closing price since Oct. 22. The volume of all futures traded was about 34 percent below the 100-day average for the time of day. Prices have declined 18 percent this year.
Brent for December settlement was 20 cents lower at $85.63 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $4.61 to WTI on ICE. The spread closed at $4.83 yesterday, narrowing for the first time in a week.
OPEC Supply
Oil has collapsed into a bear market amid rising global supplies as leading members of the Organization of Petroleum Exporting Countries resisted calls to cut production. The U.S. is pumping at the fastest pace in almost three decades while Russia’s output has climbed to near a post-Soviet record.
OPEC, responsible for about 40 percent of the world’s oil supply, produced 30.47 million barrels a day in September, compared with an official target of 30 million, its monthly report on Oct. 10 shows.
The 12-member group is scheduled to discuss output policy on Nov. 27 in Vienna. Holding an emergency meeting before that would be “ineffective” as its role has diminished compared with the 1980s amid a drop in market share, Qamsari said, according to Shana, the Iranian news service.
In the U.S., gasoline inventories probably shrank by 700,000 barrels in the week ended Oct. 24, based on the median estimate of 10 analysts surveyed by Bloomberg before tomorrow’s report from the Energy Information Administration. Distillate stockpiles, including heating oil and diesel, are projected to have fallen by 1.45 million.
The American Petroleum Institute in Washington will publish separate supply data today. The industry group collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines, while the government requires that reports be filed with the EIA, the Energy Department’s statistical arm.