Crude Falls First Time in Four Days on Inventory Outlook
West Texas Intermediate crude fell for the first time in four days on estimates that inventories rose last week to a four-month high in the U.S., the world’s biggest oil-consuming country.
Futures dropped as much as 0.9 percent. Stockpiles climbed for a sixth week in the seven days ended Oct. 25, according to a Bloomberg survey before a report from the Energy Information Administration tomorrow. Goldman Sachs Group Inc. cut its 2013 estimate for production from the Organization of Petroleum Exporting Countries, citing supply constraints in Libya.
“The idea that we will have a sixth straight week of inventory build in the U.S. is weighing on the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “As long as we continue to see weakening fundamentals, the market will have a tough time to pick its head up.”
WTI for December delivery slid 45 cents, or 0.5 percent, to $98.23 a barrel at 9:33 a.m. on the New York Mercantile Exchange. The volume of all futures traded was about 50 percent less than the 100-day average. Prices are 4 percent lower so far in October, poised for a second monthly loss.
Brent for December settlement dropped 54 cents, or 0.5 percent, to $109.07 a barrel on the London-based ICE Futures Europe exchange. Volume was 9.6 percent below the 100-day average. The European benchmark crude was at a premium of $10.84 to WTI, compared with $10.93 yesterday.
Crude stockpiles climbed by 2.35 million barrels last week to 382.1 million, the Bloomberg survey showed. The total would be the most since June 28, while the advance would be the longest stretch since March.
U.S. output has jumped 13 percent this year on increasing output from shale formations, according to the EIA, the Energy Department’s statistical arm. Refineries kept their operations at a six-month low last week, reducing demand for crude, the survey also showed.
“Yet another inventory increase is expected,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “The reasons for the WTI weakness and increasing inventories include low refinery utilization due to maintenance and yet another strong increase in shale oil production.”
The U.S. will account for about 21 percent of global oil demand this year, almost double the estimate for China, the second-biggest consumer, according to forecasts from the International Energy Agency.
Brent, the European benchmark, rallied yesterday as Libya’s crude production was cut by half amid protests. Production nationwide dropped to about 250,000 to 300,000 barrels a day as Tuareg nomads seeking greater political recognition halted flows from the Al-Sharara field, the state-run National Oil Corp. said yesterday.
OPEC’s output will decrease by 760,000 barrels per day from last year, according to Goldman Sachs, which had previously projected an annual loss of 570,000. Libya’s production will remain capped at 650,000 barrels this year, the bank predicted.
The Federal Reserve’s policy makers meet today and tomorrow to consider when to start trimming their $85 billion of monthly bond purchases. They won’t begin to slow stimulus until March, according to a Bloomberg News survey of economists this month.
To contact the editor responsible for this story: Dan Stets at firstname.lastname@example.org
Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.