Oil Falls to One-Week Low After Surprise U.S. Crude Supply Gainby
Nationwide inventories increase by 2.5 million barrels: EIA
Iran says it hasn’t decided whether to attend OPEC meeting
Oil dropped to a one-week low after a government report showed that U.S. crude inventories unexpectedly rose last week.
Crude supplies rose by 2.5 million barrels in the week ended Aug. 19, according to an Energy Information Administration report. A Bloomberg survey ahead of the data had forecast an 850,000-barrel decline. Stockpiles are at the highest seasonal level since at least 1986. Iran’s oil ministry said the country hasn’t yet decided whether to join informal OPEC talks next month in Algiers following a Reuters report that the nation had confirmed its attendance.
"We’re still in a fundamentally oversupplied market," said Adam Wise, who helps run a $7 billion oil and natural gas bond and private equity portfolio at John Hancock in Boston. "The build was unexpected and comes amid a lot of OPEC chatter, making for a sloppy, if range-bound market."
Crude entered a bull market last Thursday, less than three weeks after it tumbled into a bear market. Prices surged partly on speculation that informal discussions among members of the Organization of Petroleum Exporting Countries may lead to action to stabilize the market. Iraqi Oil Minister Jabbar Al-Luaibi has asked international companies to increase output to boost national revenue, according to a statement.
West Texas Intermediate for October delivery dropped $1.33, or 2.8 percent, to close at $46.77 a barrel on the New York Mercantile Exchange. It’s the lowest settlement since Aug. 16. Total volume traded was 3.5 percent above the 100-day average.
Brent for October settlement fell 91 cents, or 1.8 percent, to $49.05 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude closed at a $2.28 premium to WTI.
U.S. crude stockpiles rose to 523.6 million, leaving supplies at the highest seasonal level in decades, the EIA report showed. Inventories at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, advanced by 375,000.
Crude production in the U.S. fell by 49,000 barrels a day to 8.55 million, while imports surged 449,000 barrels to 8.64 million.
Refineries reduced operating rates by 1 percentage point to 92.5 percent of capacity. Refiners typically boost their operations in July to meet peak gasoline demand before ratcheting back in August. Over the past five years, refiners’ thirst for oil has dropped an average of 1.2 million barrels a day from July to October.
Gasoline supplies rose 36,000 barrels last week, the first increase in four weeks. U.S. consumption of the fuel averaged 9.74 million barrels a day in the four weeks ended Aug. 19, down 0.4 percent from the prior period and the highest seasonal level in at least a decade.
Crude rices jumped yesterday after Reuters reported that Iran is sending “positive signals” it may support joint action to bolster the oil market, citing unidentified people in OPEC and the oil industry. Iran hasn’t decided whether to join any action, according to the people. A spokesman for the country’s oil ministry on Wednesday told Bloomberg that Iran’s decision to attend the meeting in Algiers could be made as late as one day before the event.
"There’s not going to be much happening” despite talk of a deal, Ed Morse, head of commodities research at Citigroup Inc. in New York said on Bloomberg Television. Speculation about OPEC intervention is just “jawboning,” he said.
- Iraq still isn’t producing as much oil as it should be, Iraqi Prime Minister Haider Al-Abadi told reporters at a press conference in Baghdad Tuesday.
- Saudi Arabia kept its spot as China’s biggest oil supplier for the first seven months this year, even as Russia threatens to overtake the kingdom in their contest for the nation’s market, Bloomberg calculations based on data that China’s General Administration of Customs published Wednesday show.