Oil headed for the biggest weekly decline since March as a rebound in U.S. drilling added to signs that producers will pump into an oversupplied market.
Futures in New York fell for a third day and were down 4.9 percent for the week. The number of active rigs seeking oil climbed by 12 to 640, the first gain since December, according to data from Baker Hughes Inc. U.S. crude stockpiles increased by 2.39 million barrels through June 26, a government report showed Wednesday, boosting supplies further above seasonal average levels.
Oil’s recovery from a six-year low in March has faltered amid speculation that rising prices will spur production and prolong a surplus. OPEC’s output expanded last month to the highest level since August 2012 as Iraq joined Saudi Arabia in pumping at a record pace, a Bloomberg survey showed this week.
“It’s all about the glut,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “We’re not seeing as much demand as we wanted. Oil will continue to come under pressure, there is no real reason for it to go higher.”
West Texas Intermediate for August delivery lost as much as 53 cents, or 0.9 percent, to $56.40 a barrel in electronic trading on the New York Mercantile Exchange and was at $56.71 at 12:48 p.m. Singapore time. The contract decreased 3 cents to $56.93 on Thursday. Total volume was about 53 percent below the 100-day average. Prices have advanced 6.5 percent this year.
There will be no floor trading Friday because of the Fourth of July holiday in the U.S., and transactions will be booked Monday for settlement purposes.
Rig Count
Brent for August settlement slid as much as 34 cents, or 0.6 percent, to $61.73 a barrel on the London-based ICE Futures Europe exchange. It’s down 2.1 percent this week. The European benchmark crude traded at a premium of $5.22 to WTI, compared with $3.63 on June 26.
Drillers in the U.S., the world’s biggest oil consumer, have idled more than half the nation’s rigs since December, said Baker Hughes, an oilfield-services company. Production remains near the highest level in weekly Energy Information Administration records dating back January 1983.
Crude inventories climbed to 465.4 million barrels in the week ended June 26, data from the Energy Department’s statistical arm showed. That’s more than 90 million above the five-year average for this time of the year.
Narrow Range
Oil in New York traded in a $5 range in June, the narrowest in 19 months. Volume was the lowest since December and open interest, or the number of futures contracts outstanding, was the least since January. WTI, which has fluctuated at about $60 a barrel for the past two months, will average $59 in the third quarter and $63 in the fourth, according to forecasts from 22 analysts compiled by Bloomberg.
The Organization of Petroleum Exporting Countries, whose 12 members supply about 40 percent of the world’s crude, pumped 32.1 million barrels a day in June, a Bloomberg survey of producers and analysts showed. That’s a gain of 744,000 a day from May. Iraqi output increased to a record 4.39 million a day.
Twenty of 33 analysts and traders, or 61 percent, were bearish on WTI in a separate Bloomberg survey through Thursday. Seven respondents were bullish while six were neutral.
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