- Stockpiles forecast to rise 3.75 million barrels, survey shows
- Iran preparing to boost output after sanctions: oil minister
Oil dropped to a two-week low before a government report that’s projected to show an increase in U.S. crude stockpiles.
West Texas Intermediate futures slipped 0.7 percent. U.S. supplies probably rose by 3.75 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Stockpiles have climbed during October in the past five years as some refiners shut operations for maintenance. OPEC will hold technical discussions with several non-members including Russia on Wednesday.
“I’m surprised we’re not a little weaker ahead of the data," Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group Ltd, said by phone. "I doubt anything will come from the OPEC technical meeting tomorrow, but there could be some saber-rattling in the run-up. People are on guard."
Oil failed to sustain a gain above $50 a barrel earlier this month amid signs the market will remain oversupplied. The Organization of Petroleum Exporting Countries continues to pump more than its quota and Iranian Oil Minister Bijan Namdar Zanganeh has predicted no imminent change in the group’s production strategy. His own government is preparing to boost output once sanctions are removed, he told reporters in Tehran.
WTI for November delivery, which expired Tuesday, slipped 34 cents to $45.55 a barrel on the New York Mercantile Exchange. It was the lowest close since Oct. 2. The volume of all futures traded was 8.4 percent below the 100-day average at 4:40 p.m. The more active December future increased 1 cent to $46.29.
Futures extended losses after the American Petroleum Institute was said to report U.S. crude supplies climbed 7.05 million barrels last week. December WTI traded at $45.93 at 4:39 p.m.
Brent for December settlement rose 10 cents to end the session at $48.71 a barrel on London-based ICE Futures Europe. The European benchmark crude closed at a $2.42 premium to December WTI.
U.S. crude stockpiles probably expanded for a fourth week, according to the Bloomberg survey. That would be the longest run of gains since April and keep supplies more than 100 million barrels above the five-year seasonal average, according to EIA data.
Refineries probably cut operating rates 0.5 percentage point to 85.5 percent of capacity, the least since the week ended Jan. 16, the survey showed. U.S. refiners typically slow during October to perform maintenance during a low demand period.
"We’re in the middle of refinery maintenance season," Geir Rune Johnskareng, who helps manage C$5 billion ($3.85 billion) as a portfolio manager at Manulife Asset Management in Montreal, said by phone. "You would expect a build at this time of year."
Iran is pushing to regain global oil sales it lost after the U.S. and other world powers imposed sanctions over its nuclear program. The country can boost exports by 500,000 barrels a day within a week of the removal of penalties, Roknoddin Javadi, managing director of state-run National Iranian Oil Co., told reporters. Shipments can be increased by 1 million barrels a day within six months of the curbs being lifted, he said.
Iran is the fifth-biggest OPEC producer, according to data compiled by Bloomberg. The 12-member group has pumped above its 30 million-barrel-a-day quota for the past 16 months.