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Oil declines from three-month high as US supplies seen rising

Tuesday, October 4, 2016 - 15:20

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Oil declined from the highest close in three months before weekly data forecast to show US crude stockpiles expanded.

[HONG KONG] Oil declined from the highest close in three months before weekly data forecast to show US crude stockpiles expanded.

Futures lost as much as 0.9 per cent in New York after climbing 9.3 per cent the previous four sessions.

Crude inventories probably increased by 1.75 million barrels last week, rising for the first time in five weeks, a Bloomberg survey showed before a government report on Wednesday.

Production from Libya, among countries exempt from an Organisation of Petroleum Exporting Countries (Opec) output cut, rose to 500,000 barrels a day and will climb further this month, a state oil company official said.

Oil in September capped the biggest monthly gain in five months after the Opec agreed to trim supply for the first time in eight years.

While quotas will be decided at the group's official meeting in Vienna on Nov 30, Nigeria and Iran have said they are exempt and Iraq has said it doesn't accept Opec's estimates of its production levels.

"The Opec deal does put a more concrete floor under the price in the low $40s," said Ric Spooner, a chief market analyst at CMC Markets in Sydney.

"There is still a surplus in place and I wouldn't be surprised to see oil begin to falter around these levels."

West Texas Intermediate for November delivery lost as much as 43 US cents to US$48.38 a barrel on the New York Mercantile Exchange and was at US$48.49 at 7.45am in London.

The contract rose 57 US cents to US$48.81 on Monday, the highest close since July 1.

Total volume traded was about 45 per cent below the 100-day average. Prices rose 7.9 per cent last month.

US Stockpiles Brent for December settlement slid as much as 36 US cents, or 0.7 per cent, to US$50.53 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a US$1.55 premium to WTI for December.

Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, probably increased by 105,000 barrels last week, according to a Bloomberg survey before an Energy Information Administration report.

Gasoline inventories probably expanded by 550,000 barrels.

BLOOMBERG

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