Oil Trades Near $45 as Equities Retreat, U.S. Crude Output Slips

  • U.S. production falls to 10-month low; OPEC volumes decline
  • WTI advanced as much as 4.5% before U.S. equities retreated

What Are the Ripple Effects of Lower Oil Prices?

Oil traded near $45 a barrel in New York as equities retreated while U.S. crude production slipped the seventh time in eight weeks.

West Texas Intermediate futures erased a 4.5 percent gain after the Standard & Poor’s 500 Index stumbled into the fourth quarter. Prices climbed earlier after government data on Wednesday showed U.S. crude output declined last week. Traders are following the progress of Hurricane Joaquin, which gathered strength and threatens the U.S. East Coast.

Crude is still down more than 25 percent from this year’s closing peak in June amid speculation a global glut that drove prices to a six-year low will linger as China’s economy grows at the slowest pace in a generation. U.S. crude stockpiles rose last week and remain about 100 million barrels above the five-year seasonal average.

"The equities turned around and crude followed," Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston, said by phone. "This has nothing to do with the fundamentals of the oil market."

WTI, Brent

WTI for November delivery slipped 35 cents to settle at $44.74 a barrel on the New York Mercantile Exchange. The contract touched $47.10 earlier, the highest intraday price since Sept. 23. The volume of all futures traded was 23 percent above the 100-day average at 2:58 p.m.

Brent for November settlement fell 68 cents, or 1.4 percent, to end the session at $47.69 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a $2.95 premium to WTI.

"We’re going to continue to see choppy sideways trading around $45 a barrel," Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, said by phone. "The market is still consolidating above the six-year lows reached in August."

U.S. crude production declined 40,000 barrels a day to 9.1 million last week, the least since November 2014, according to Energy Information Administration data. Stockpiles rose 3.96 million barrels to 457.9 million in the week ended Sept. 25, the EIA said.

Extremely Dangerous

Members of the Organization of Petroleum Exporting Countries cut crude production by 0.7 percent to 32 million barrels a day in September. The cuts were led by Saudi Arabia and Iran, according to a Bloomberg survey of oil companies, producers and analysts. Saudi Arabia curbed output by 200,000 barrels a day to 10.3 million.

Joaquin strengthened into an “extremely dangerous” Category 4 hurricane as it battered the central Bahamas and forecasters debated how much of a threat the major storm poses to the U.S. East Coast. Joaquin raked parts of the Bahamas on Thursday with top winds of 130 miles (210 kilometers) per hour, up from 120 earlier, and that pounding will probably last into Friday, the National Hurricane Center in Miami said in a 2 p.m. advisory.

Gasoline futures for November delivery were little changed at $1.3668 a gallon in New York.

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