Oil trades below $47/bbl ahead of U.S. inventory report
NEW YORK (Bloomberg) -- Oil dropped below $47/bbl before data forecast to show that gasoline stockpiles declined while crude inventories increased in the U.S., the world’s largest oil consumer.
Futures declined for a second day in New York, trading between $46-$48 over the past week. Inventories of gasoline probably slid by 1.25 MMbbl last week and crude stockpiles may have climbed by 1.5 MMbbl, according to a Bloomberg survey before an Energy Information Administration report on Wednesday. Market volatility will persist while demand and supply rebalance, according to executives gathering at an oil conference in Norway. The dollar advanced, curbing the appeal of commodities as an investment.
Oil entered a bull market Aug. 18, less than three weeks after tumbling into a bear market, as prices surged partly on speculation that talks next month among members of the Organization of Petroleum Exporting Countries may result in action to stabilize the market. A deal to freeze output was proposed in February but a meeting in April ended with no final accord.
“There is a whole slew of indications on the fundamental side that we should effectively be lower,” Harry Tchilinguirian, head of commodities research at BNP Paribas SA in London, said by telephone. “In the absence of any new supply disruption and in the absence of any progress in the supposed producer dialogue that will take place in Algiers, the market could easily retrace a few dollars.”
The Bloomberg Dollar Spot Index rose as much as 0.5%t on mounting speculation the Federal Reserve will raise interest rates this year.
West Texas Intermediate for October delivery fell 69 cents, or 1.5%, to $46.29/bbl at 10:53 a.m. on the New York Mercantile Exchange. Total volume traded Tuesday was about 8% below the 100-day average.
U.S. stockpiles
Brent for October settlement, which expires Wednesday, decreased 90 cents, or 1.8%, to $48.36/bbl on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $2.09 premium to WTI. The more-active November contract fell 38 cents to $48.55/bbl.
U.S. crude inventories expanded by 2.5 MMbbl to 523.6 MMbbl through Aug. 19, according to EIA data. They probably increased by 1.5 MMbbl last week, according to the median estimate in the survey. Both crude and gasoline stockpiles are at their highest seasonal level in more than two decades.
