Wednesday’s oil price fall came after a rally on Tuesday when prices rose by over 3% on reports of a strike at Brazil’s state oil producer Petrobras and the closure of the Libyan oil export terminal.
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The EIA (U.S. Energy Information Administration) published its weekly crude oil, gasoline, and distillates report on November 4, 2015. Production added 1.29% to 9.70-M BPD, while imports gained 1.83% to 0.72-M bpd. “The weak product-supplied numbers are cause for concern”. That’s mixed, however, as manufacturing data revealed signs of contraction earlier this week.
Oil has slumped more than 40% in the past year amid speculation that a global glut will be prolonged.
Oil prices took another turn overnight, nearly wiping out the solid gains achieved in the prior session. WTI is heading for the biggest drop since October 12. The volume of all futures traded was about 13% below the 100-day average.
The discount in price of oil for immediate delivery relative to that for delivery in a year, or contango, neared its largest diff in almost two months this week, touching $7 a barrel.(Contango means that forward contractual prices are higher than today’s prices).
Nymex reformulated gasoline blendstock for December-the benchmark gasoline contract-rose 84 points to $1.3694 a gallon, while December diesel traded at $1.4931, 59 points higher.
Crude stockpiles in the US probably increased by 2.5 MMbbl through October 30, the Bloomberg survey shows.
“For that to happen, the market needs to see, at least directionally, a few form of improvement, whether that translates into significantly lower production in the US or at least much stronger refinery runs”.
“Supply is still the story”, Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney, said by phone.
The price of oil dipped sharply Wednesday morning after the federal government reported crude stockpiles jumped by 2.8 million barrels last week. Companies have sharply cut spending on new drilling, and output has fallen from a peak of 9.6 million barrels a day in April. Total processing was 15.6 million barrels a day last week, 21,000 barrels per day more than the week before.
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US crude output will retreat by about 10 percent in the 12 months ending April, according to Daniel Yergin, vice chairman of IHS Inc.
