Oil falls for 5th straight session, ends below $86
BY MYRA P. SAEFONG and BARBARA KOLLMEYER, Marketwatch
SAN FRANCISCO -- Oil futures closed under $86/bbl Wednesday, falling for a fifth session in a row, pressured by a hefty climb in U.S. crude supplies and unable to find support from a mixed batch of global economic data.
Crude for December delivery fell 94 cents, or 1.1%, to settle at $85.73/bbl on the New York Mercantile Exchange. Futures prices haven't settled below $86 since the first half of July, according to FactSet data.
Prices kept their losses after the Federal Reserve announced, shortly before the Nymex oil session close, that it made no changes to its monetary policy.
The Energy Information Administration on Wednesday reported a 5.9 million-bbl increase in crude supplies for the week ended Oct. 19.
Analysts polled by Platts had been looking for a 1.7 million-bbl increase on the week.
"The latest EIA supply number further confirms my generally bearish outlook on the oil market at present, as weak demand conditions continue to co-exist along with relatively plump non-OPEC supplies," said Matthew Parry, senior oil-market analyst at the International Energy Agency.
To Parry, "the big issue is still the weak state of the global economy, trimming potential demand, but the rhetoric that came from Iran yesterday will be enough to stop prices contracting too heavily," he said in emailed comments.
Iran's oil minister reportedly said Tuesday that his nation will stop oil exports if the U.S. and Europe add to the sanctions they imposed on Iran.
Motor gasoline supplies added 1.4 million bbl, while distillate stocks fell 600,000 bbl, the EIA's weekly update also showed. Analysts had forecast a decline of 1 million bbl for gasoline and a drawdown of 1.5 million bbl for distillates, according to the Platts survey.
Separately, the American Petroleum Institute said late Tuesday that crude supplies rose 313,000 bbl last week.
"With ample supply, combined with a lack of geopolitical headlines, we expect prices to accelerate lower for the remainder of the week barring any weakness in the U.S. dollar," said John Macaluso, research analyst at Tyche Capital Advisors.
Strength in the dollar further pressured dollar-denominated oil for now. The ICE dollar index (DXY) was at 79.977, off an earlier high of 80.151 but up from 79.922 on Tuesday.
Oil products finished little changed. The November contracts for heating oil and gasoline fell 0.1%, to close at $3.04 and $2.60 a gallon, respectively.
Natural gas for November delivery also fell 8.5 cents, or 2.4%, to settle at $3.45 per million British thermal units after posting a 2.4% gain Tuesday.
Shortly before trading closed on Nymex, the Federal Reserve said it made no changes to its ultra-easy policy stance.
Following the Fed decision, the "conclusion is interest rates will continue to remain low for the foreseeable future," said Macaluso. "We feel today's EIA inventory numbers, which were bearish on crude, will come more into focus. If we see any strength in the energy complex we feel it will be short lived."
Oil futures traded lower after the October composite euro-zone purchasing managers index indicated contraction, defying forecasts for a modest rise. Also, the German Ifo business climate index dropped for the sixth straight month.
Still, sentiment in oil found some support after the flash version of HSBC's China manufacturing purchasing managers' index hit a three-month high, helped by new orders.
Also Wednesday, Markit said its U.S. flash manufacturing purchasing managers' index edged up to 51.3 in October from the three-year low of 51.1 set in September.
And U.S. data on new-home sales showed a 5.7% rise in September to a seasonally adjusted annual rate of 389,000, the highest pace since April 2010. But the sales pace in August was downwardly revised and the median sales price in September declined by 3.2%.
Dow Jones Newswires