Oil Drops to One-Week Low Amid Swelling U.S. Fuel StockpilesBy
Government report noted bearish gasoline, diesel trends
Fighting in northern Iraq curbs Kurdish crude oil exports
Oil declined to the lowest level in a week after a closely watched tally of U.S. fuel inventories revealed a rise in gasoline and diesel supplies.
Futures slid 1.4 percent in New York. Gasoline stockpiles in the world’s biggest economy increased for a fourth straight week while supplies of distillates -- the class of fuels that includes diesel and heating oil -- tipped upward for the first time since August, according to Energy Information Administration data released Wednesday.
“We’re following through on the bearish influence that we had from product builds in the U.S.,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by telephone. “There is a lot of speculative length that has built up in the market and it’s probably a good time to be selling into the recent rallies and securing those profits.”
The U.S. benchmark has closed above $51 a barrel for five straight sessions as conflict between Iraq’s central government and the semi-autonomous Kurds cut crude flows through a pipeline to the Turkish port of Ceyhan. Still, the supply reductions may be short-lived because of government plans to boost investment in the Kurdish region’s oil fields.
The market’s “unwinding some of the reaction to Kurdistan,” James Williams, president of London, Arkansas-based energy researcher WTRG Economics, said by telephone. “There’s no reports of damage to anything. Both the Kurds and the Iraqis want production to be flowing.”
Meanwhile, OPEC sent its strongest signal yet that the group and allied producers will extend output cuts set to expire in March by as much as nine months. A balanced market is now “in sight,” Secretary-General Mohammad Barkindo said.
West Texas Intermediate for November delivery, which expires Friday, dropped 75 cents to settle at $51.29 a barrel on the New York Mercantile Exchange. The more-active December contract edged lower by 75 cents to settle at $51.51.
Brent for December settlement fell 92 cents to end the session at $57.23 on the London-based ICE Futures Europe exchange. The global benchmark crude was at a premium of $5.72 to WTI for the same month.
In the U.S., gasoline inventories expanded by 908,000 barrels last week, while distillate supplies climbed by 528,000 barrels to 134.5 million barrels, according to the EIA.
Other oil-market news:
- Analysts and traders are bearish on WTI crude futures, a weekly Bloomberg survey showed.
- OPEC shipments will fall to 23.7 million barrels a day in the four weeks to Nov. 4 versus the period to Oct. 7, tanker-tracker Oil Movements said in a weekly report.
- Chevron Corp. suspended drilling operations in Kurdistan amid rising tensions between the central government and local authorities.
- The crisis unfolding around the Iraqi city of Kirkuk has left some commodity-trading houses worried the Kurds will struggle to repay billions of dollars in cash-for-oil loans.
- The world’s biggest oil traders say crude could rise above $60 in a year as demand grows and OPEC keeps trimming supplies. Or it might fall to $45 as another wave of U.S. shale production hits the market.
— With assistance by Heesu Lee, Tsuyoshi Inajima, Amanda Jordan, and Alex Longley