BLBG: Oil Falls as U.S. Supply Seen Rising While Russia Resists Cuts
Total U.S. crude stockpiles gain by 4.75 million barrels: API
Russia prefers production freeze to cuts: nation’s OPEC envoy
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Oil dropped for a third day after industry data showed U.S. crude stockpiles expanded as Russia reiterated it would prefer freezing output at current levels rather than cutting.
Futures declined as much as 1.6 percent in New York after closing below $50 a barrel Tuesday for the first time in more than a week. U.S. crude inventories increased by 4.75 million barrels last week, the American Petroleum Institute was said to report. Energy Information Administration data Wednesday is forecast to show supplies rose. Output cuts are not an option for Russia, the nation’s envoy to OPEC said, according to Interfax.
Oil has fluctuated near $50 a barrel amid uncertainty about whether the Organization of Petroleum Exporting Countries can implement the first output cuts in eight years and get producers outside the group to join in, notably Russia. An OPEC committee will meet this week to try to resolve differences over how much individual members should pump, with Iraq saying it should be exempt because of conflict with Islamic militants.
“Comments from Russia yesterday have added to the doubts in the oil market fueled by the comments earlier this week from Iraq,” Jens Pedersen, an analyst at Danske Bank A/S said by e-mail. “That in turn has led the market to gradually price out the impact of a deal.”
West Texas Intermediate for December delivery dropped as much as 80 cents to $49.16 a barrel on the New York Mercantile Exchange, and was at $49.21 at 10:02 a.m. in London. The contract fell 56 cents to $49.96 on Tuesday, the lowest close since Oct. 17. Total volume traded was about 32 percent below the 100-day average.
U.S. Stockpiles
Brent for December settlement lost as much as 77 cents, or 1.5 percent, to $50.02 a barrel on the London-based ICE Futures Europe exchange. Prices closed down 67 cents at $50.79 a barrel on Tuesday, the lowest settlement since Sept. 30. The global benchmark traded at a 88-cent premium to WTI.
For a story on what the OPEC output deal means for Saudi Arabia, click here.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, dropped by 2.26 million barrels last week, the API said Tuesday, according to people familiar with the figures. Nationwide crude inventories probably increased by 2 million barrels, according to the median estimate in a Bloomberg survey before the EIA report.
Oil-market news:
OPEC Secretary-General Mohammed Barkindo said the 14-nation group is facing its toughest challenge as members debate oil-production cuts needed to balance the market. He will visit Iraq Wednesday and Kuwait and the United Arab Emirates in early November.
There’s still a chance that Iraq can resolve a dispute with OPEC over the level of its current output, Iraq’s Prime Minister Haider Al-Abadi said at a press conference in Baghdad.
