Oil Extends Loss as Industry Data Shows Gasoline Build
Oil Eases After September Surge as OPEC Production Inches Higher
(Bloomberg) -- Oil held on to losses after an industry report was said to show a rise in gasoline supplies.
Prices extended declines in after-market trading following the release of data from the American Petroleum Institute Tuesday, which was said to show U.S. gasoline inventories rose by 4.91 million barrels last week. That would be the largest build since January if Energy Information Administration data released on Wednesday confirms it. U.S. crude inventories fell by 4.08 million barrels last week, the data showed.
A build in gasoline wouldn’t be surprising as we aren’t using as much product this time of year, James Williams, president of London, Arkansas-based energy researcher WTRG Economics, said by telephone. If EIA data confirms the build in gasoline though, it’s likely we will see a drop in product prices, he said.
End-of-year demand for oil typically weakens as refiners shut units for repairs and maintenance, shunting more supplies into storage tanks. However, in the advent of Hurricane Harvey, some refiners have decided to delay maintenance projects to take advantage of strong demand for fuel and fatter profits.
West Texas Intermediate for November delivery traded at $50.20 a barrel at 4:43 p.m. after settling at $50.42 a barrel on the New York Mercantile Exchange, the lowest close in more than a week. Total volume traded was about 43 percent below the 100-day average.
Brent for December settlement dropped 12 cents to end the session at $56 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $5.26 to December WTI.
The API report also showed distillate supplies dropped by 584,000 barrels, according to people familiar with the data, who asked not to be named because the information isn’t public. Inventories at the Cushing, Oklahoma, storage hub climbed by 2.08 million, the API data showed, which would be the biggest build since March if EIA data confirms it.
The Bloomberg survey showed a 500,000-barrel drop in crude stockpiles, while gasoline supplies probably rose by 1 million barrels and distillate inventories slid by 1.5 million barrels. Oil stored at the key Cushing, Oklahoma, storage hub probably swelled by 1.8 million barrels, according to a forecast compiled by Bloomberg.
Bull Market
Oil’s foray into bull-market territory last week was thwarted this week by a report that the Organization of Petroleum Exporting Countries pumped more crude in September as Libya, Nigeria, Saudi Arabia and others boosted output.
Officials from oil producing nations will discuss the global market and mechanisms for overseeing oil exports under OPEC’s deal to reduce production at an energy forum this week in Moscow, Russian Energy Minister Alexander Novak said.
“We’ve rallied too fast too quickly, so the market’s basically given up a little bit of this,” Michael Loewen, a strategist at Scotiabank in Toronto, said by telephone. Many market participants are taking the attitude that “I’m going to buy at $45 and I’m going to sell at $55 and I’m just going to rinse and repeat.”
Oil-market news:
- Venezuela invited Egypt to “participate in the OPEC and non OPEC agreement” during a meeting in Moscow, the ministry said in a statement.
- OPEC and its partners, including Russia, need to extend their oil-production cuts for at least three more months to keep crude prices at current levels, according to UBS Group AG.
--With assistance from Ben Sharples and Grant Smith
To contact the reporter on this story: Jessica Summers in New York at jsummers24@bloomberg.net.
To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net, Mike Jeffers, Joe Carroll