NEW YORK: Crude oil prices fell yesterday as Brent’s front-month contract approached expiration at the end of the session and under pressure from ample US crude supply and concerns about economic growth in Europe and China.
Front-month Brent November crude felt the most pressure, with the contract set to go off the board at the end of yesterday’s session. But Brent retreated only after reaching a four-week high above $ 116 a barrel and after Brent’s premium to US crude advanced to $ 24.28, the highest since October 2011.
US November crude seesawed either side of unchanged, as did prices for most nearby crude contracts and heating oil and RBOB gasoline futures.
Maintenance curbed North Sea production and the threat that escalating conflict in Syria could drag neighboring states into the turmoil have helped propel Brent’s premium to its US counterpart, along with the long-running dispute between the West, Israel and Iran concerning Tehran’s nuclear program.
Brent November crude fell 93 cents to $ 114.87 a barrel by 1630 GMT, after reaching $ 116.20, the highest for front-month Brent since prices reached $ 117.02 on Sept. 17.
Brent December crude was down 64 cents at $ 113.76 a barrel.
US November crude was down 19 cents at $91.66 a barrel. Yesterday’s $ 91.30 to $ 92.32 trading range was inside the previous session’s range. The US November crude contract expires on Oct. 22.
After inventories rose more than forecasted in the week to Oct. 5, expectations are that US crude stocks increased again last week on rising imports. Weak demand for fuel and higher refinery capacity use allowed gasoline stockpiles to rise, a preliminary Reuters poll of analyst showed on Monday.
Adding to the improved supply picture, Saudi Arabia pumped around 9.77 million barrels a day (bpd) of crude oil in September, an industry source said on Monday.
According to official Saudi government figures supplied to OPEC, the Kingdom produced 9.75 million bpd in August and 9.8 million bpd of crude in July.
“Fundamentally there is no shortage of oil, with Saudi Arabia and others maintaining high output while inventory levels are also good,” said Ken Hasegawa, a commodity sales manager with Newedge in Tokyo.
“On the other hand, there is tension in the market with what is happening in Iran and the Turkey-Syria issue. That has put a floor on prices.”
Oil prices under pressure from ample US supply
