August 18, 2017
Oil headed for a third weekly drop as U.S. crude output rose to a two-year high and Chinese refining slowed, signs that the world’s two biggest consumers may stymie OPEC-led efforts to trim a global glut.
Futures were little changed in New York, down 3.3 percent for the week. U.S. production had the biggest weekly advance since June, according to Energy Information Administration data on Wednesday, offsetting the largest decline in stockpiles in almost a year. Oil processing in China fell in July, the biggest decline for that particular month in three years, figures from the National Bureau of Statistics showed Monday.
Oil this month has fluctuated in the tightest range since February as production cuts by the Organization of Petroleum Exporting Countries and its allies drain a surplus more slowly than expected. Brent crude prices will struggle to climb above $60 a barrel during the next five years because of plentiful supplies from both OPEC and U.S. shale, according to Citigroup Inc.
“Prices were unimpressed by the reported significant drop in oil inventories,” said Norbert Ruecker, head of commodities research at Julius Baer Group Ltd. in Zurich. “Instead, the market’s focus was possibly on robust U.S. output growth or the fact that the driving season and seasonal demand strength are set to ebb over the coming weeks.”
West Texas Intermediate for September delivery was at $47.29 a barrel on the New York Mercantile Exchange, up 20 cents, at 1:25 p.m. in London. Total volume traded was 16 percent below the 100-day average. Prices rose 31 cents, or 0.7 percent, to $47.09 on Thursday, the first gain in four sessions.
Brent for October settlement rose 17 cents to $51.20 a barrel on the London-based ICE Futures Europe exchange. The contract on Thursday advanced 76 cents, or 1.5 percent, to $51.03 a barrel. Prices are down 1.7 percent this week. The global benchmark crude traded at a premium of $3.76 to WTI.
U.S. crude output rose by 79,000 barrels a day to 9.5 million a day last week, the highest since July 2015, the Energy Information Administration reported Wednesday. Stockpiles declined for a seventh week to 466.5 million barrels.
U.S. gasoline demand in July increased by 1 percent from a year earlier to a record 9.69 million barrels a day, the American Petroleum Institute said Thursday in a monthly report. The physical crude market is showing strength beyond its usual seasonal peak, a positive indicator for global benchmark futures that remain stuck near $50 a barrel. Brent’s curve has strengthened to levels last seen in 2014, when prices topped $100.