Oil Slips From Three-Month High as U.S. Stockpiles Seen Rising

(Bloomberg) -- Oil slipped from a three-month high in New York before a government report that’s projected to show that U.S. crude stockpiles grew for the first time since August.

Futures slipped 0.3 percent after surging 9.3 percent the previous four sessions. Crude supplies probably increased by 1.5 million barrels last week, rising for the first time in five weeks, a Bloomberg survey showed before the Energy Information Administration report on Wednesday. Prices climbed earlier as Hurricane Matthew threatened to disrupt fuel shipments along the U.S. East Coast and investors look ahead to next month’s OPEC meeting. Futures rose from the settlement following an American Petroleum Institute report Tuesday evening that was said to show U.S. crude stockpiles fell last week.

“The market is positioning ahead of U.S. weekly data that’s expected to show a minimal increase in crude supplies,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York.

Oil in September capped the biggest monthly gain in five months after the Organization of Petroleum Exporting Countries agreed to trim supply for the first time in eight years. Quotas will be decided at the group’s official meeting in Vienna on Nov. 30. OPEC crude production rose to a record in September, according to a Bloomberg survey.

West Texas Intermediate for November delivery fell 12 cents to settle at $48.69 a barrel on the New York Mercantile Exchange. The contract reached $49.13 earlier, the highest intraday level since July 5.

Futures rose from the settlement after the industry-funded American Petroleum Institute was said to report U.S. crude supplies declined by 7.6 million barrels last week. November WTI traded at $49.07 at 4:48 p.m. in New York.

Fuel Stockpiles

Brent for December settlement declined 2 cents to $50.87 a barrel on the London-based ICE Futures Europe exchange. Prices reached $51.37, the highest since June 10. The global benchmark closed at a $1.57 premium to WTI for December delivery.

Gasoline inventories probably expanded by 500,000 barrels in the week ended Sept. 30, according to the Bloomberg survey. Analysts projected that the report will show refineries reduced operating rates and that supplies of distillate fuel, a category that includes diesel and heating oil, declined.

Rising prices have drawn explorers back to the U.S. shale patch. Rigs targeting crude in the nation rose to the highest level since February, Baker Hughes Inc. said on its website Friday.

"I’m going to be looking at the production number," said Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees $133 billion of assets. "The U.S. rig count is up and it will be very interesting to see when that leads to higher output."

Hurricane Threat

Gasoline futures climbed 2 percent as the hurricane was forecast to head northward along the East Coast, potentially reaching New York Harbor, the delivery point for Nymex contracts. That may disrupt shipments temporarily as tankers change course to avoid the hurricane.

OPEC boosted output by 170,000 barrels a day in September to 33.75 million barrels a day, the Bloomberg survey of analysts, oil companies and ship-tracking data showed. Nigeria and Libya added a combined 190,000 barrels a day which compensated for a drop in output from Saudi Arabia and Angola. 

Production from Nigeria and Libya is returning after internal unrest crippled the countries’ oil infrastructure. Together with Iran, they will likely be exempt from the preliminary deal to cut output.

Oil-market news:

• BP Plc’s Clair offshore field near the U.K.’s Shetland Islands is still shut following an oil leak.
• Chinese gasoline will reach the U.S. East Coast for the first time in nine years as a surge in New York prices helps ease a glut in Asia.

--With assistance from Jessica Summers To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net. To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Carlos Caminada, Will Wade