Oil Slips to One-Week Low as U.S. Crude Stockpiles Seen Risingby
U.S. data to show supplies rose third week: Bloomberg survey
IEA sees oil surplus persisting in 2016 as demand growth slows
Oil slipped to a one-week low amid speculation that U.S. supplies grew as refineries performed seasonal maintenance.
West Texas Intermediate fell 0.9 percent. The Energy Information Administration will probably report on Thursday that U.S. crude stockpiles rose a third week as refineries reduced operating rates, according to a Bloomberg survey. Refiners typically plan maintenance for this time of year because demand dips with the end of the summer driving season. Global markets will remain oversupplied in 2016 as demand growth slows, the International Energy Agency said in a report Tuesday.
Oil advanced above $50 a barrel last week for the first time since July, but has failed to sustain gains amid speculation the market could remain oversupplied. China’s economic slowdown is affecting global growth amid this year’s plunge in commodity prices. OPEC has pumped more than its 30 million-barrel daily quota for 16 consecutive months.
"We’re waiting for something to give the market a strong signal," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. "It’s refinery maintenance season so demand is weak now."
WTI for November delivery fell 44 cents to settle at $46.66 a barrel on the New York Mercantile Exchange. It’s the lowest close since Oct. 5. Futures climbed as much as 2.8 percent to $48.43 during the session. The volume of all futures traded was 36 percent above the 100-day average at 2:50 p.m.
Brent for November settlement slipped 62 cents, or 1.2 percent, to $49.24 a barrel on the London-based ICE Futures Europe exchange. European benchmark crude closed at a $2.58 premium to WTI.
"We’re just chopping around here," Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, said by phone. "I don’t see how we can get a significant rally."
U.S. crude supplies probably rose 2.58 million barrels last week, according to the median estimate of 10 analysts surveyed by Bloomberg. Inventories were about 100 million above the five-year seasonal average in last week’s report.
The IEA said that global oil demand growth will revert to long-term trend levels of 1.2 million barrels a day in 2016, down from 1.8 million this year, amid a softer economic outlook for oil exporters. Total supply from nations outside OPEC will decline by 500,000 barrels a day next year, which the IEA said last month was the steepest drop since 1992. U.S. oil output will fall to 12.56 million barrels a day in 2016, from 12.75 million this year.
In contrast, Abdalla Salem El-Badri, secretary-general of the Organization of Petroleum Exporting Countries, said Monday global oil demand is expanding while non-OPEC nations will supply less. OPEC increased its forecast for the amount of crude it will need to supply next year by 500,000 barrels to 30.8 million a day, according to its monthly report on Monday. U.S. output is projected to fall in 2016 for the first time in eight years, OPEC said.
“The current situation in the market is positive,” El-Badri said at a conference in Kuwait City. “I expect to see a balanced market in 2016, if the current situation persists.”