WTI Oil Falls After Biggest Gain in Week as Stocks Rise
West Texas Intermediate retreated following the biggest rise in a week as crude stockpiles increased in the U.S., the world’s largest oil consumer.
Futures dropped as much as 1.3 percent after advancing 1.1 percent yesterday. U.S. crude supplies climbed by 5.94 million barrels last week, according to the industry-funded American Petroleum Institute. Prices rose the most since Oct. 10 yesterday as U.S. lawmakers agreed to end a 16-day government shutdown and extended the nation’s borrowing authority until early next year. President Barack Obama signed the measure into law.
“It was a huge stock build reported by the API, that was quite bearish,” said Torbjoern Kjus, a senior oil analyst at DnB ASA in Oslo. Prices are also weakening as the U.S. debt accord is “a short-term fix, just kicking the can down the road,” he said.
North Sea Brent for December settlement slid $1.01 to $109.58 a barrel on the London-based ICE Futures Europe exchange. The November contract expired yesterday after rising 90 cents, or 0.8 percent, to $110.86. The volume of all Brent futures traded was about 43 percent below the 100-day average.
December Brent crude was at a premium of $8.45 to the equivalent-month WTI contract, the narrowest since Oct. 9 for a front-month. The gap between November contracts was $8.57 yesterday.
U.S. gasoline inventories dropped by 2.21 million barrels last week, according to the API in Washington. Distillate supplies, including heating oil and diesel, declined by 1.32 million barrels. The Energy Information Administration, the Energy Department’s statistical arm, won’t release weekly stockpile data today because of the government shutdown.
WTI fell to a three-month low of $100.60 a barrel in intraday trading on Oct. 11 amid concern a default would undermine the U.S. economy and reduce fuel demand. The latest legislation will put federal workers back on the job, prevent a potential default on U.S. debt and make no major policy changes sought by Republicans. Lawmakers didn’t resolve their long-term divides on fiscal policy and will have to return to the same issues over the next four months.
The Republican-controlled House of Representatives voted 285-144 to clear the bill, less than three hours after the Democratic Senate passed the measure, 81-18. The U.S. will account for about 21 percent of global oil consumption this year, the International Energy Agency estimates.
Iran and world powers will hold another round of negotiations next month over the Persian Gulf country’s nuclear program after concluding two days of discussions in Geneva. The government in Tehran is calling on the U.S. and European Union to ease sanctions that have battered its economy and curbed its crude exports.
U.S. and European diplomats said the negotiations, the first since Hassan Rouhani was elected president and pledged to repair Iran’s global standing, went into more detail than previous rounds and took place in a more constructive atmosphere. Specialists will meet on technical and sanctions-related aspects of the proposals before Nov. 7, when talks will resume.
To contact the reporter on this story: Grant Smith in London at email@example.com
To contact the editor responsible for this story: Stephen Voss at firstname.lastname@example.org