Oil extends losses as other markets fall, stockpiles climb

Crude inventories climbed by 9.7 million barrels in the week to October 5 to 410.7 million. (Reuters)
Updated 11 October 2018
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Oil extends losses as other markets fall, stockpiles climb

  • US crude stockpiles rose more than expected last week, while gasoline inventories increased and distillate stocks drew
  • Crude inventories climbed by 9.7 million barrels in the week to October 5 to 410.7 million

TOKYO: Oil fell to two-week lows on Thursday as it extended big losses from the previous session amid a rout in global stock markets, with prices also hit by an industry report showing US crude inventories rose more than expected.
Supply worries also eased as Hurricane Michael likely spared oil assets from significant damage as it smashed into Florida, even as it caused at least one death, injuries and widespread destruction.
Brent crude futures were down $1.32, or 1.6 percent, at $81.77 a barrel by 0543 GMT. They earlier touched their lowest since Sept. 27 at $81.35, after closing 2.2 percent lower on Wednesday.
US West Texas Intermediate (WTI) crude futures were down by $1.10, or 1.5 percent, at $72.07, having fallen to their lowest since Sept. 28. They dropped 2.4 percent in the previous session.
Stocks on major world markets slid to a three-month low on Wednesday, with the benchmark S&P500 stock index falling more than 3 percent, its biggest one-day decline since February.
Technology shares tumbled on fears of slowing demand and concerns about US-China tensions. Japan’s Nikkei 225 was down more than 4 percent on Thursday.
“The clear risk-off mode that we are seeing across all markets is also hitting oil and those previous supply concerns have simply evaporated,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
Volumes for Brent are four times the average for the Asian time zone, while WTI contracts were about 75 percent above typical turnover, McCarthy said.
“So, there is real commitment in the selling ... adding to the idea that we are seeing a turn in the market,” he said.
US crude stockpiles rose more than expected last week, while gasoline inventories increased and distillate stocks drew, industry group the American Petroleum Institute said on Wednesday.
Crude inventories climbed by 9.7 million barrels in the week to Oct. 5 to 410.7 million, compared with analyst expectations for an increase of 2.6 million barrels.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 2.2 million barrels, API said.
The US Energy Information Administration (EIA) is due to release official government inventory data Thursday at 11 a.m. EDT.
In the US Gulf of Mexico, producers have cut daily oil production by roughly 42 percent due to the storm, the Bureau of Safety and Environmental Enforcement said. The cuts represent 718,877 barrels per day of oil production.
While production has been cut because of the hurricane, “down time is expected to be brief and Gulf of Mexico output now accounts for a comparatively small portion of total US production,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
US oil output is expected to rise 1.39 million bpd to a record 10.74 million bpd, the EIA said in its monthly forecast on Wednesday.


OPEC may cancel April meet, but hold steady on oil output: Saudi energy minister

Saudi Arabia’s energy minister Khalid Al-Falih that April may be premature to make any production decision for the second half. (Reuters)
Updated 55 min 17 sec ago
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OPEC may cancel April meet, but hold steady on oil output: Saudi energy minister

  • ‘As long as the levels of inventories are rising and we are far from normal levels, we will stay the course guiding the market toward balance’
  • ‘The consensus we heard ... is that April will be premature to make any production decision for the second half’

BAKU: OPEC and its non-OPEC partners need to reconsider if there is a need for a meeting in April, Saudi Arabia’s energy minister said on Monday, adding that there was no pressure from the United States to increase supply.
“We are not under pressure except by the market,” Khalid Al-Falih told reporters ahead of a meeting of the Joint Ministerial Monitoring Committee (JMMC) in Baku, the capital of Azerbaijan.
“As long as the levels of inventories are rising and we are far from normal levels, we will stay the course guiding the market toward balance.”
The JMMC includes major oil producers Saudi Arabia and Russia and monitors the oil market and conformity levels with supply cuts.
“There is a consensus that has also emerged that no matter what, we should stay the course until the end of June.”
Asked whether he was updated on whether the United States administration would extend the waivers it granted to buyers of Iranian crude, which are due to end in May, Al-Falih said: “Until we see it hurting consumers, until we see the impact on inventory, we are not going to change course.”
The oil producers are due to meet next in April in Vienna, but Al-Falih said this may not happen.
“The consensus we heard ... is that April will be premature to make any production decision for the second half,” Al-Falih said.
“We may not have a meeting in April,” he said, adding that the JMMC may recommend this later on Monday.