TM:WTI trades near four-month low on US crude supply; Brent gains
LONDON, Nov 4 — West Texas Intermediate oil traded near the lowest price in more than four months amid speculation US crude supplies will be sufficient. London-traded Brent rebounded as an index of China’s services industry advanced to the highest level this year.
Futures in New York fell 3.3 per cent last week, the most since June. Crude stockpiles in the US, the world’s biggest oil consumer, rose for the past six weeks, according to government data. Libya is boosting production and preparing to resume operations at an export terminal, an official of the OPEC member’s Oil Ministry said.
“The oil market has been oversupplied for some time now and that hasn’t changed,” Myrto Sokou, senior research analyst at Sucden Financial Ltd in London, said by phone. “It is now reacting more to macro-financial news than fundamental data, so the main focus of the day will be the release of key US economic data.”
WTI for December delivery was at US$94.86 (RM301.19) a barrel in electronic trading on the New York Mercantile Exchange, up 25 cents at 10.27am London time. It dropped 1.8 per cent to US$94.61 (RM300.31) on November 1. The volume of oil futures traded in New York was about 55 per cent below the 100-day average.
Brent for December settlement climbed as much as 67 cents, or 0.6 per cent, to US$106.58 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of US$11.52 to WTI, compared with US$11.30 on November 1.
Crude supplies
WTI slid the past four weeks, the longest losing streak in 17 months, amid expanding US crude supplies. Stockpiles increased to 383.9 million barrels in the seven days through October 25, the highest level since June, data from the Energy Information Administration showed last week. Inventories at Cushing, Oklahoma, the delivery point for New York-traded futures, rose to 35.5 million, the most in two months, according to the Energy Department’s statistical unit.
“The big risk is to the downside, even though prices have come off quite a bit,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “For the supply side, the market isn’t so concerned about the risk premium in the Middle East. If we just look at the basic demand and supply figures, we could expect prices to go below US$90 a barrel.”
Crude prices may decrease as the “intensity” of supply disruptions, which tightened the market in the third quarter, eases, Barclays Plc said in a report on November 1. The bank maintained its fourth-quarter forecast for Brent crude at US$105 a barrel.
Libyan production
Output in Libya, holder of Africa’s largest proven oil reserves, advanced to 400,000 barrels a day, according to Ibrahim Al Awami, the Oil Ministry’s head of measurement and inspection. That’s about 100,000 barrels more than earlier last week. The member of the Organization of Petroleum Exporting Countries is preparing to reopen its Hariga terminal “soon,” he said by phone yesterday.
WTI’s decline may stall as a technical indicator signals further losses may not be sustainable. The 14-day relative strength index is below 30 for a second day, according to data compiled by Bloomberg. Crude rebounded in April from about US$86 a barrel when the RSI was last below that level. Investors typically buy contracts when the market is oversold.
China’s non-manufacturing Purchasing Managers’ Index gained to 56.3 in October from 55.4 in September, the National Bureau of Statistics and China Federation of Logistics said in Beijing yesterday.
The Asian nation, the world’s second-biggest oil consumer, will account for about 11 per cent of global demand this year, compared with 21 per cent for the US, according to forecasts from the International Energy Agency. — Bloomberg
