Oil's bull market rally stalls as traders await inventory data

By Jessica Summers on 10/3/2017

NEW YORK (Bloomberg) -- Oil bounced around near the $50/bbl mark awaiting reports on U.S. inventories.

Futures traded in a 51 cent-range in New York. U.S. crude stockpiles are seen falling in a Bloomberg survey ahead of the release of weekly inventory data, yet Cushing supplies are seen increasing. Meanwhile, the market reckoned with data showing that output from the Organization of Petroleum Exporting Countries increased last month and news that Libyan production is set to recover from a five-month low as the nation’s biggest field restarts.

“It looks our strong rally of the last couple of months seems to be catching its breath,” Gene McGillian, a market research manager at Tradition Energy in Stamford, Conn., said by telephone. “Looking forward, we’re going to be watching the inventory reports to see if demand levels start to drop off as we go into the last quarter of the year and whether or not the drop-off in inventory levels we’ve seen in the last couple of months basically comes to an end.”

Oil has slid back toward $50/bbl in New York after entering a bull market last week. OPEC nations pumped slightly more crude in September as Libya, Nigeria, Saudi Arabia and other producers boosted output. Officials from oil producing nations will discuss the global market, mechanisms for overseeing oil exports under OPEC’s deal to reduce production at an energy forum this week in Moscow, Russian Energy Minister Alexander Novak said.

West Texas Intermediate for November delivery fell 15 cents to $50.43/bbl at 9:45 a.m. on the New York Mercantile Exchange. Total volume traded was about 41% below the 100-day average.

Brent for December settlement dropped 6 cents to $56.06/bbl on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $5.28 to December WTI.

U.S. inventories

U.S. crude inventories probably fell by 500,000 bbl last week, according to the median estimate in a Bloomberg survey. At the same time, gasoline supplies are seen rising by 1 MMbbl and distillate inventories likely slid by 1.5 MMbbl. Cushing, Oklahoma crude stockpiles rose by 1.8 MMbbl, according to a forecast compiled by Bloomberg.

The Energy Information Administration’s weekly inventory data is scheduled to be released on Wednesday, while the industry-funded American Petroleum Institute will release data on Tuesday.

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