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Oil cuts loss on Wall Street rebound; oversupply still weighs

Oil cuts loss on Wall Street rebound; oversupply still weighsNEW YORK: US crude oil futures fell about half percent on Thursday while Brent steadied, tracking an oversupplied market and weak gasoline prices before rebounding on the improved sentiment on Wall Street.

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 were down 30 cents at $ 46.02 a barrel by 12:30 p.m. EST (1730 GMT), trading between $ 46.65 and $ 45.55.

Brent futures were up 10 cents at $ 48.68, after moving between $ 48.08 and $ 49.00.

Prices came off their lows as the key U.S. stocks index S&P500 erased most early losses.

On the oil products side, gasoline futures lost nearly 1 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.

“What we’re seeing is not a good sign for November,” said Scott Shelton, oil broker and commodities specialist at ICAP in Durham, North Carolina.

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.

Outside of the United States, supply of North Sea crude, which underpins Brent prices, is 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.

“The difficulty right now for the market is being able to lift off from the current floor that it has found in the mid-$ 40s on a WTI basis,” said BNP Paribas global head of commodity strategy Harry Tchilinguirian said.

“For that to happen, the market needs to see, at least directionally, some form of improvement, whether that translates into significantly lower production in the U.S. or at least much stronger refinery runs.”

Copyright Reuters, 2015

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