Crude Tumbles Most in Seven Weeks as American Stockpiles Swell
Oil traded near a four-year high as U.S. urged OPEC to raise production after sanctions on Iran may squeeze global markets.
(Bloomberg) -- Oil dropped from the highest price in almost four year amid signs of a growing crude surplus in the world’s biggest economy.
Futures fell 2.7 percent in New York on Thursday for the deepest one-day dive in seven weeks. An additional 1.7 million barrels of oil were stowed in tanks at a key U.S. pipeline hub in Oklahoma in the five days to Oct. 2, data provider Genscape Inc. was said to have reported. That followed Wednesday’s U.S. government tally that showed nationwide inventories surged by the steepest margin since March 2017.
Oil has been rallying as shrinking output from Venezuela to Iran stoked worldwide concern about a supply crunch. U.S. President Donald Trump has repeatedly chided OPEC to lift output. Although oil-producing nations benefit during market rallies, prices at too high a level can imperil energy demand.
“If Genscape is right and we do have more oil then the drop in inventories we witnessed over the last year plus is coming to an end,” said Gene McGillian, manager of market research at Tradition Energy.
West Texas Intermediate for November delivery fell $2.08 to settle at $74.33 a barrel on the New York Mercantile Exchange. Total volume traded was about 13 percent above the 100-day average.
Brent for December settlement declined $1.71 to close at $84.58 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $10.33 premium to WTI for the same month.
“After the past few days of higher moves I think there’s increasing worry about the demand outlook,” said John Kilduff, partner at Again Capital LLC.
U.S. efforts to isolate Iran are crippling the Islamic Republic’s ability to export crude. Russian Energy Minister Alexander Novak told radio station Business FM that the uncertainty around Iran may push oil to $100 later this year.
Meanwhile, U.S. crude explorers pumped a record 11.1 million barrels a day last week, the Energy Information Administration said on Wednesday.
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--With assistance from Tsuyoshi Inajima and Grant Smith.
To contact the reporter on this story: Samuel Robinson in New York at srobinson145@bloomberg.net
To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Joe Carroll, Carlos Caminada
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