Oil Tumbles After U.S. Crude Stockpiles Increase a Sixth Week

  • U.S. crude inventories rose 2.85 millon barrels, EIA data show
  • Oil may never rise to $100 a barrel again, Vitol CEO says

Oil dropped the most in three weeks after government data showed that U.S. crude inventories climbed.

Stockpiles rose 2.85 million barrels last week, according to an Energy Information Administration report. Crude production climbed a second week, the report showed. Demand for gasoline and distillate fuel declined. Crude oil imports on the Gulf Coast dropped to 2.54 million barrels a day, the lowest since November 1991.

"There’s a big global glut of oil and a lot has sloshed into the U.S.," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. "The weak product-supplied numbers are cause for concern. They show that we’ve got tepid demand, which makes sense given the mixed economic data we’ve had."

Futures have slumped almost 40 percent in the past year amid speculation the global glut will be prolonged as the Organization of Petroleum Exporting Countries continues to pump above its quota. Oil may never rise to $100 a barrel again, said Vitol Group, the world’s largest independent oil trader. Shipments from a Libyan port were halted Tuesday amid a dispute between the nation’s two rival administrations, while a strike crimped Brazilian output.

Oil Down

West Texas Intermediate for December delivery slipped $1.58, or 3.3 percent, to settle at $46.32 a barrel on the New York Mercantile Exchange. It was the biggest decline since Oct. 12. The volume of all futures traded was 6.4 percent above the 100-day average.

Brent for December settlement fell $1.96, or 3.9 percent, to end the session at $48.58 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a $2.26 premium to WTI.

Nationwide crude stockpiles rose to 482.8 million barrels in the week ended Oct. 30, the most since May. Inventories at Cushing, Oklahoma, the delivery point for WTI futures, declined 212,000 barrels.

Refineries increased operating rates by 1.1 percentage point to 88.7 percent last week. U.S. processors boosted utilization in November during four of the past five years as the annual maintenance period -- timed to a post-summer lull in fuel demand -- finishes and plants gear back up for winter.

"Crude supplies will probably start to draw once more refining capacity is back online," Craig Bethune, a fund manager at Manulife Asset Management Ltd. in Toronto who focuses on energy and natural resources investments, said by phone. "We’ve not seen that yet, but it will start soon."

Falling Production

U.S. crude production grew by 48,000 barrels a day to 9.16 million. Output is down about 500,000 barrels a day from the 9.61 million reached in June, the most since 1972. American oil production will fall by 1 million barrels a day from its peak by early next year, Vitol Chief Executive Officer Ian Taylor said at a conference in London Wednesday.

American crude and fuel imports fell last week, continuing a decade-long trend. Fuel imports dropped 607,000 barrels a day to 1.21 million last week, the lowest since September 1996.

Brazil’s daily oil output has been affected by a workers’ strike at state-controlled Petroleo Brasileiro SA, with output falling as much as 273,000 barrels a day Monday, the company said Tuesday. Petrobras estimated the current strike is cutting daily crude output by 8.5 percent, according to a regulatory filing.

Libya’s oil production has dropped to less than 400,000 barrels a day after the halt of shipments from Zueitina amid the escalating conflict between the country’s two rival administrations. The Tripoli-based NOC declared force majeure on shipments on Tuesday.

(An earlier version of this story corrected the spelling of a country name in the second paragraph.)

Before it's here, it's on the Bloomberg Terminal.