Oil headed for the biggest monthly decline in a year as brimming crude and fuel inventories force a retreat toward $40 a barrel.
Futures were little changed in New York, down 15 percent for the month. U.S. crude inventories rose for the first time since May while gasoline stockpiles expanded through July 22, swelling a surplus of supplies that are at the highest seasonal level in at least two decades. Libya’s biggest oil ports are reopening after a dispute with guards at the facilities was settled.
Oil has slipped about 20 percent since early June after almost doubling from a 12-year low in February as supply disruptions from Nigeria to Canada trimmed a worldwide surplus. Producers including BP Plc, Royal Dutch Shell Plc and Total SA reported sharp declines in second-quarter earnings as lower prices continued to take their toll.
“There is too much oil in the market, there’s an incredible amount,” said Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney. “Oil is in a range of $40 to $50 a barrel and prices below $40 a barrel are going to be a problem.”
West Texas Intermediate for September delivery was 9 cents lower at $41.05 a barrel on the New York Mercantile Exchange at 1:57 p.m. Hong Kong time. The contract fell 1.9 percent to $41.14 on Thursday, the lowest close April 19. Total volume traded was about 30 percent below the 100-day average. The monthly drop is the biggest since July 2015.
Brent for September settlement, which expires Friday, slid 5 cents to $42.65 a barrel on the London-based ICE Futures Europe exchange. Prices are down 14 percent this month, the most since December. The more-active October contract lost 4 cents to $43.19. The global benchmark traded at a premium of $1.58 to WTI for September.
For a story on challenges the new OPEC chief may face, click here.
U.S. crude stockpiles increased by 1.67 million barrels last week to 521.1 million as output rose, the Energy Information Administration reported Wednesday. Supplies remain more than 100 million barrels above the five-year average. Gasoline inventories expanded for a third week to 241.5 million barrels.
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