Oil Loses Steam as Industry Data Shows Surprise U.S. Crude Build
(Bloomberg) -- Oil’s rally lost some momentum after an industry report showed a gain in U.S. crude stockpiles.
Futures in New York edged lower from the settlement Tuesday after the American Petroleum Institute was said to report U.S. crude stockpiles increased 1.25 million barrels last week, a stark contrast to the 2.5 million barrel draw analysts in a Bloomberg survey were expecting. If key government data released on Wednesday confirms the build, it will be the first since early August, which plays into seasonal norms for this time of year when refinery maintenance occurs.
“We may see some extra crude as we enter refinery maintenance season,” as plants require less crude while units are undergoing maintenance, said James Williams, president of London, Arkansas-based energy researcher WTRG Economics. “It’s normal for this time of year.”
Prices rose during the session amid indications that Saudi Arabia is said to be comfortable with Brent rising past $80 a barrel as markets adjust to the loss of Iranian supply due to sanctions. Iranian oil exports have plunged about 35 percent since April.
"We’re seeing spare capacity globally heading toward critical levels as sanctions against Iran start biting," said Bart Melek, head of global strategy at TD Securities. "As countries like South Korea stop using crude from the Islamic Republic, Saudi Arabia is going to try and fill that gap and we will see less capacity in the global supply chain of crude."
Saudi Arabia, Russia and other major exporting countries are scheduled to meet Sunday in Algiers to review the oil market. As investors evaluate the impact of Iranian sanctions, a growing trade dispute between the U.S. and China has the potential to weigh on demand. China said it will impose retaliatory tariffs against $60 billion of U.S. goods, starting Sept. 24. That follows an announcement from the U.S. that it will impose a 10 percent tariff on about $200 billion in Chinese goods next week.
West Texas Intermediate crude for October delivery traded at $69.75 a barrel at 4:45 p.m. after settling at $69.85 a barrel on the New York Mercantile Exchange.
Brent for November settlement advanced 98 cents to $79.03 on the ICE Futures Europe exchange. The global benchmark crude traded at a $9.44 premium to WTI for the same month.
The API was also said to report gasoline inventories fell 1.49 million barrels last week, while distillate rose and Cushing, Oklahoma, crude stockpiles fell. Cushing, Oklahoma crude stockpiles likely fell 800,000 barrels last week, according to a forecast compiled by Bloomberg.
Some other key oil-market figures, news an3d events:
- Gasoline futures rose 1.4 percent to settle at $2.0049 a gallon.
- Saudi Arabia’s refinery output rose to 3.062 million barrels a day in July, up 6.7 percent from June levels, according to JODI data.
- Russia’s soaring crude production is set to continue rising for the next three years but will only increase further if its tax system is changed.
©2018 Bloomberg L.P.