Oil Rises as U.S. Stockpiles Are Said to Rise Less Than Expected

  • U.S. crude stockpiles rose by 1.44 million barrels last week
  • Gasoline supplies dropped, distillates shrank most since 2004

Does OPEC Have Any Fight Left in It?

Oil rose as an industry report was said to show U.S. stockpiles climbed less than expected.

The price spike in after-hours trading helped erase almost all of the regular session’s loss on Tuesday. U.S. crude inventories increased by 1.44 million barrels last week, the American Petroleum Institute was said to report Tuesday. That’s less than half the 3.9 million-barrel increase the Energy Information Administration is forecast to report Wednesday, according to a Bloomberg survey. This may be a sign that demand from refineries battered by Hurricane Harvey is coming back to normal.

“We’re going to find that refiners are back online sooner,” after Harvey-led shutdowns, James Williams, president of London, Arkansas-based energy researcher WTRG Economics, said by telephone. “Things are returning to normal. In the short-term, we are going to head back to pre-hurricane status.”

While the U.S. benchmark has tipped above $50 this month, prices haven’t sustained a close above that key level since the end of July as increasing U.S. shale output hindered efforts by OPEC, Russia and other major sources of supply to whittle a stubborn glut. The Energy Information Administration sees shale-oil production reaching a record high next month.

Futures rose from the settlement after the release of API data. West Texas Intermediate for October delivery, which expires Wednesday, traded at $49.85 a barrel at 4:44 p.m. in after-market trading after settling at $49.48 a barrel on the New York Mercantile Exchange. Total volume traded was about 6 percent below the 100-day average. WTI closed below its 200-day moving average after moving above the level earlier in the session.

“It’s no accident” that prices rose slightly above the 200-day moving average before reverting lower, Bart Melek, head of global commodity strategy at TD Securities in Toronto, said by telephone. “We’re going to hover around there for a while.”

Brent for November settlement fell 34 cents to end the session at $55.14 a barrel on the London-based ICE Futures Europe exchange, the lowest level in a week. The global benchmark traded at a premium of $5.24 to November WTI.

See Also: OPEC’s Allies Race Ahead on Output Cuts

The API report also showed that gasoline stockpiles slid by 5.06 million barrels, while distillate supplies shrank by 6.13 million, the biggest draw since 2004, according to people familiar with the data, who asked not to be named because the information isn’t public.

At least 13 fuel-making plants from Louisiana to Montana, including the largest U.S. refinery operated by Motiva Enterprises LLC in Texas, are postponing autumn maintenance for weeks or months, according to company statements and people familiar with the situations. Some plants are churning out more fuel to take advantage of strong profit margins, while others are understaffed because workers were dispatched to help Gulf Coast facilities restart after Hurricane Harvey.

Oil-market news:

  • Iraq and some other oil producers taking part in global output cuts think they should reduce supply by an additional 1 percent to help re-balance the market, according to Iraqi Oil Minister Jabbar al-Luaibi. Some also favor extending cuts until the end of 2018, he said.
  • Goldman Sachs Group Inc. raised its global demand growth forecast for next year to 1.51 million barrels a day because of its projected 3.8 percent growth in global economic output and $58-a-barrel Brent price forecast, analysts said in a note.
  • A powerful 7.2 magnitude earthquake struck near Mexico City, toppling buildings and extinguishing lights as thousands of people fled.
  • Hurricane Maria strengthened after battering the storm-ravaged Caribbean island nation of Dominica overnight on course for a direct hit on Puerto Rico just two weeks after Irma caused as much as $1 billion in damage on the bankrupt island.

— With assistance by Melissa Cheok, Ben Sharples, Grant Smith, and Sheela Tobben

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