Oil fell to its lowest in four days after U.S. crude stockpiles climbed for a fourth week and a measure of China’s economy declined, signaling fuel demand may be faltering in the world’s biggest users of the commodity.
Futures fell as much as 1 percent in New York after the industry-funded American Petroleum Institute said yesterday inventories rose 462,000 barrels last week in the longest run of gains since May. An Energy Department report today may show supplies increased 1.5 million barrels, according to a Bloomberg News survey. China’s purchasing managers’ index for non-manufacturing industries expanded at the weakest pace since at least March 2011, data from the National Bureau of Statistics and China Federation of Logistics and Purchasing showed.
“Demand is increasing slightly, slowly, whereas supply is increasing a little bit faster,” said Andy Sommer, a senior oil analyst at Axpo Trading AG in Dietikon, Switzerland, who predicts Brent crude will trade from $105 to $112 a barrel this month. “I don’t see big potential to the upside for oil. Of course there’s always risk from the political side, but from a fundamental point of view there’s more downward pressure.”
Crude for November delivery slid as much as 96 cents to $90.93 a barrel in electronic trading on the New York Mercantile Exchange, dropping below $91 for the first time since Sept. 27, and was at $91.10 at 1:19 p.m. London time. Prices are down 8 percent this year.
Brent oil for November settlement on the London-based ICE Futures Europe exchange dropped $1.28, or 1.2 percent, to $110.29 a barrel. The European benchmark crude was at a premium of $19.22 to New York-traded West Texas Intermediate grade, from $19.68 yesterday.
Crude inventories at Cushing, Oklahoma, the delivery point for futures traded in New York, advanced 105,000 barrels to 43.8 million in the week ended Sept. 28, according to the API. That’s the first gain in four weeks.
“The U.S. has been very sloppy demand-wise for a number of years,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “We’ve seen those figures turn to increasing stockpiles. The market may be expecting that trend to continue.”
Gasoline stockpiles nationwide fell by 59,000 barrels, the data showed. Supplies are projected to drop by 500,000 barrels, according to the median estimate of 11 analysts surveyed before the Energy Department report. Distillate-fuel inventories, a category that includes heating oil and diesel, declined by 321,000 barrels, the API said. They are forecast to decrease by 400,000 barrels, the survey showed.
The Energy Department will release its report at 10:30 a.m. in Washington. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
China’s services PMI slid to 53.7 in September from 56.3 in August, today’s data showed. The number was lower than any previous reading in data compiled by Bloomberg News and starting in March 2011. Readings above 50 indicate expansion. Similar measures for manufacturing industries have shown contractions for last month.
Iraq, OPEC’s second-biggest oil producer, is “happy” with prices at current levels, according to Thamir Ghadhban, a senior adviser to Prime Minister Nouri al-Maliki. Crude exports by the nation, which surpassed Iran’s production in June, will reach 2.9 million barrels a day next year as daily output rises to 3.6 million barrels, Ghadhban said in an interview in Dubai yesterday. Saudi Arabia is the largest of the 12 producers in the Organization of Petroleum Exporting Countries.
Oil’s decline in New York may stall along its 100-day moving average, at around $90 a barrel today, according to data compiled by Bloomberg. That’s also near the lower Bollinger Band, an indicator of technical support where buy orders tend to be clustered.