Oil Caps Third Weekly Loss as U.S. Stockpiles Sustain Glutby
WTI dropped below $40 this week for first time since August
Brent climbed as Draghi hints at more monetary easing by ECB
Oil capped a third weekly decline in New York on signs a global glut will be prolonged as U.S. stockpiles see their longest run of gains in seven months.
West Texas Intermediate oil fell 0.9 percent this week. U.S. crude stockpiles rose an eighth week, leaving supplies more than 100 million barrels above the five-year average for this time of year, government data showed Wednesday. Brent futures climbed in London after European Central Bank President Mario Draghi hinted at additional stimulus.
"The world is awash in oil," Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, said by phone. "Prices should continue to grind lower until we start to see a drop-off in inventories."
Crude has slumped 47 percent in the past year amid speculation a surplus will persist as the Organization of Petroleum Exporting Countries, threatened by surging output mainly from North America and Russia, continues to pump above its quota. Saudi Arabia is working with producers inside and outside the 12-member group to stabilize the market, Saudi Oil Minister Ali al-Naimi said in Bahrain Thursday.
West Texas Intermediate for December delivery, which expired Friday, fell 15 cents, or 0.4 percent, to settle at $40.39 a barrel on the New York Mercantile Exchange. It was the lowest close for a contract closest to expiration since Aug. 26. The more-active January futures increased 18 cents to $41.90.
Brent for January settlement advanced 48 cents, or 1.1 percent, to end the session at $44.66 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a $2.76 premium to January WTI.
U.S. crude stockpiles expanded to 487.3 million barrels in the week ended Nov. 13, according to Energy Information Administration data. Refinery rates rose while inventories at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, increased for a second week.
The global economy is going through an unstable period, Saudi Arabia’s al-Naimi said Thursday. Crude demand is expected to rise by 1 million barrels a day every year in this decade, and the world requires more investments in oil to compensate for declining recovery rates, he said.
Brent gained after Draghi set the scene for further action in two weeks’ time, saying the institution will do what’s necessary to reach its inflation goal rapidly.
WTI climbed from its lows after the number of active U.S. oil rigs dropped to a five-year low. The active oil rig count fell by 10 to 564 this week, according to data compiled by Baker Hughes Inc.