BS: Oil Near Lowest Since ’09 With Supply at Year-End Record
Oil traded near the lowest since 2009 amid speculation that U.S. crude inventories will stay at the highest for the time of year in at least three decades.
West Texas Intermediate fell as much as 1.7 percent before erasing losses. U.S. stockpiles are projected to remain at 387.2 million barrels last week, the highest for the period in data going back to 1982, a Bloomberg News survey shows before government data tomorrow. U.S. oil drillers last week idled the most rigs since 2012, Baker Hughes Inc. said on its website yesterday.
Oil has slumped 46 percent this year, set for the biggest annual decline since 2008, as the highest U.S. production in more than three decades contributed to a global surplus estimated by Qatar at 2 million barrels a day. Saudi Arabia, which is steering the Organization of Petroleum Exporting Countries to resist cutting output, has said it’s confident that prices will rebound as economic growth boosts demand.
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“All this North American oil has really changed the tone of the market,” said Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut. “We have a global surplus of oil. The factors that have been weighing on the market for the past few months are still the dominant features.”
WTI for February delivery rose 11 cents to $53.72 at 9:24 a.m. on the New York Mercantile Exchange after earlier falling as far as $52.70, the lowest since May 2009. The volume of all futures traded was about 31 percent below the 100-day average for the time of day.
Crude Inventories
Brent for February settlement fell 30 cents, or 0.5 percent, to $57.58 a barrel on the London-based ICE Futures Europe exchange after reaching $56.74, also the lowest since May 2009. Volume was 29 percent below the 100-day average. The European benchmark crude traded at a premium of $4.23 to WTI on the ICE.
U.S. crude inventories have risen to almost 13 percent above the five-year average level of 343.1 million barrels for this time of year, Energy Information Administration data showed. Supplies of gasoline and distillate, including diesel and heating oil, were expected to increase, according to the Bloomberg survey. The EIA, the Energy Department’s statistical, will release its weekly report tomorrow.
“Nowhere are signs of a rising crude glut more visible right now than in the U.S.,” David Wech, an analyst at consultants JBC Energy GmbH, said in a report.
Domestic Output
U.S. domestic production expanded to 9.14 million through Dec. 12, the most in weekly data that started in January 1983, according to the EIA.
The slide in oil prices has contributed to the steepest annual slide in the ruble since 1998, given crude is Russia’s main export earner. OPEC has so far resisted calls from cash-strapped Venezuela to act and stem the rout in prices.
U.S. production from fracking is flooding the market, Venezuela President Nicolas Maduro said in a speech broadcast on state television yesterday. The South American country had called for an output cut at OPEC’s Nov. 27 meeting in Vienna.
OPEC, which supplies about 40 percent of the world’s oil, pumped 30.56 million barrels a day in November, according to data compiled by Bloomberg. That exceeded its collective target of 30 million for a sixth straight month.
U.S. production growth may slow next year as companies reduce spending and drilling, said James Williams, an economist at WTRG Economics, an energy-research firm in London, Arkansas.
U.S. rigs targeting oil declined by 37 to 1,499 in the week ended Dec. 26, the lowest since April, Baker Hughes said on its website yesterday, extending the three-week decline to 76.
“By mid-year we should see production growth slowing,” Williams said.
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Moming Zhou in New York at mzhou29@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Stephen Cunningham, Rachel Graham
