West Texas Intermediate crude headed for a fourth weekly drop, the longest losing streak since November, on signs of slowing demand. Brent rose from a 13-month low on speculation losses have been excessive.
Futures were little changed in New York. The U.S. Energy Information Administration and Paris-based International Energy Agency cut 2014 forecasts for global demand this week. Iraqi Prime Minister Nouri al-Maliki said yesterday he has agreed to leave office and clear the way for his designated successor to take over. WTI will probably decline further in coming days, a Bloomberg News survey shows.
“The reports from the EIA and IEA confirm what the market was already expecting, a near-term outlook where supply growth easily keeps up with demand growth,” Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen, said by e-mail. “If it wasn’t for geopolitical worries, oil prices would be lower at this stage.”
WTI for September delivery was up 12 cents at $95.70 a barrel in electronic trading on the New York Mercantile Exchange at 1:20 p.m. London time, and poised for a 2 percent weekly loss. The volume of all contracts traded was 7.5 percent higher than the 100-day average for the time of day. The contract slid $2.01 to $95.58 yesterday, the lowest settlement since Jan. 21.
Brent for October settlement was 46 cents higher at $102.53 a barrel on the ICE Futures Europe exchange in London, set for a weekly loss of 2.4 percent. The September contract expired yesterday after declining 2.2 percent to $102.01 a barrel, the lowest settlement for a front-month contract since June 26, 2013. The U.S. benchmark crude traded at a discount of $8.34 a barrel to Brent for October on ICE, compared with a front-month spread of $7.37 on Aug. 8.
“Today’s rebound is mostly regular trading on the back of yesterday’s sell-off,” Michael Poulsen, an analyst at Global Risk Management Ltd. in Middelfart, Denmark, said of the recovery in Brent prices.
The departure of al-Maliki ends a political impasse and may enable Iraq’s Prime Minister-designate, Haidar al-Abadi, to pull together a more inclusive government better able to counter Islamist militants advancing in the north, and heal sectarian and ethnic rifts.
“It avoids a drawn-out power struggle, which is a positive,” Richard Mallinson, an analyst Energy Aspects Ltd. in London, said by e-mail. “Abadi can now concentrate on trying to form a new government, which will involve reaching out to Sunnis and Kurds. But the more compromises he makes to them, the more challenges he may face from within the Shia community.”
A supply glut is shielding the market from disruptions, the IEA said on Aug. 12. The agency reduced estimates for 2014 global oil demand growth by 180,000 barrels a day following a weaker assessment of the world economy by the International Monetary Fund.
Global oil demand will average 91.56 million barrels a day this year, down from 91.62 million estimated last month, the EIA said in its monthly Short-Term Energy Outlook on Aug. 12. Oil production in the U.S., the world’s biggest consumer, increased to 8.5 million barrels a day in July, the most since April 1987, the Energy Department’s statistical arm said.
WTI will probably fall in the week through Aug. 22 as stockpiles rise, according to 36 percent of 36 analysts and traders surveyed by Bloomberg. Twelve respondents predicted prices will climb while 11 estimated little change. Last week, crude inventories expanded by 1.4 million barrels to 367 million, the first increase since June, EIA data show.