August 17, 2017
Oil held losses near the lowest close in more than three weeks as investors weighed expanding U.S. crude output against an extended decline in stockpiles during a period of strong seasonal demand.
Futures were 0.4 percent lower in New York after falling 4.2 percent the previous three sessions. U.S. production had its biggest weekly gain since the end of June, climbing to the highest level since July 2015, according to Energy Information Administration data Wednesday. The increase offset the price impact of an 8.95-million-barrel decline in crude stockpiles, the biggest drop since September.
Oil this month has fluctuated in the tightest range since February as output cuts by the Organization of Petroleum Exporting Countries and its allies drain a global glut more slowly than expected. While U.S. stockpiles have declined for seven weeks, they still remain about 80 million barrels above the five-year average.
“On the current weekly trend, U.S. production is only about 4 weeks away from reaching the production high of June 2015,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland.
West Texas Intermediate for September delivery was at $46.61 a barrel on the New York Mercantile Exchange, down 17 cents, at 12:38 p.m. in London. Total volume traded was in line with the 100-day average. Prices lost 77 cents to $46.78 on Wednesday, the lowest close since July 24.
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Brent for October settlement slipped 11 cents to $50.16 a barrel on the London-based ICE Futures Europe exchange. Prices decreased 53 cents, or 1 percent, to $50.27 on Wednesday. The global benchmark crude traded at a premium of $3.38 to October WTI.
U.S. crude output rose by 79,000 barrels a day last week to 9.5 million a day, the EIA reported. Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, expanded a second week to 57 million barrels. Gasoline inventories climbed by 22,000 barrels to 231 million.
A U.S. government auction of offshore oil and gas leases in the Gulf of Mexico drew just $121 million in bids on Wednesday, a 56 percent drop from a March auction that offered less acreage. Oil prices will struggle to rise above $60 a barrel during the next five years because of plentiful supplies from both OPEC and U.S. shale, Citigroup Inc. said. Saudi Arabia, the world’s biggest crude exporter, shipped the least oil in almost three years in June, just as domestic stockpiles are dwindling. OPEC’s effort to end a worldwide glut seems to be flagging. For the second straight month, the group’s compliance with agreed production cuts stayed below 90 percent, as nations including Saudi Arabia pumped slightly more crude, and others, such as Iraq and Algeria, still haven’t trimmed as much supply as promised.