Friday, 06 November 2015 02:26
NEW YORK: Oil settled down as much as 2 percent on Thurday as an oversupply of crude and weak gasoline prices extended the previous session’s rout.
Crude prices fell nearly 4 percent on Wednesday after the U.S. government reported a 2.85 million-barrel crude inventory spike as higher domestic production made up for lower imports last week.
In Thursday’s session, U.S. crude’s West Texas Intermediate (WTI) futures settled down $ 1.12, or 2.4 percent, at $ 45.20 a barrel.
Brent futures closed down 60 cents, or 1.2 percent, at $ 48.68. Brent briefly rose during the session, supported by steady share prices on Wall Street.
On the oil products side, gasoline futures lost 2 percent, extending Wednesday’s 4 percent tumble, amid worries of peak turnout from U.S. refineries as the autumn maintenance cycle draws to a close.
Market intelligence firm Genscape added to the bearish sentiment in crude oil, estimating a build of over 383,000 barrels at the Cushing, Oklahoma delivery point for U.S. crude futures in the week to Nov. 3, traders who saw the data said.
According to Genscape, Cushing took in nearly 713,000 barrels in the four days to Nov. 3, showing a supply onslaught late in that week which most likely offset an earlier draw, the traders said.
“What we’re seeing is not a good sign for November,” Scott Shelton, oil broker for ICAP in Durham, North Carolina, said, referring to Cushing’s worsening fundamentals.
BNP Paribas’ global head of commodity strategy Harry Tchilinguirian said significantly lower U.S. production or much stronger refinery runs were needed to lift oil from the $ 40 levels.
Jim Ritterbusch, at market consultancy Ritterbusch & Associates in Chicago, concurred.
“This remains a difficult trading environment given the sizable zigs and zags that have left most portions of the energy complex virtually unchanged from a week ago,” Ritterbusch said. “In any event, a bearish stance is still advised.”
Outside of the United States, supply of North Sea crude, which underpins Brent prices, was also ample, pushing the global crude benchmark to June lows.
Brent’s spot contract and oil slated for delivery in a year was at a discount, or “contango”, of nearly $ 7 a barrel, the biggest in two months.
In Friday’s session, traders will be looking out for U.S. October jobs data and signs whether the Federal Reserve will raise interest rates by the year-end. Higher rates will boost the dollar, weighing on oil and other commodities.