West Texas Intermediate and Brent headed for a second weekly drop amid signs that crude supply will continue to rise even as global demand weakens.
Futures are 0.2% lower in New York this week and down 2.9% in London. Brent closed below $100 a barrel for a third time yesterday as the International Energy Agency cut its global oil demand forecasts and OPEC trimmed its output target. The US will join the European Union in stiffening sanctions on Russia over Ukraine, prompting the government in Moscow to threaten retaliation.
“There’s a supply issue, particularly in the U.S.,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “There are clear questions around demand growth for oil over the next one to two years, particularly given the weakness in Europe. That’s why oil is settling in these lower ranges.”
WTI for October delivery was at $93.06 a barrel, up 23 cents in electronic trading on the New York Mercantile Exchange at 1:35 p.m. Singapore time. The contract gained $1.16 to $92.83 yesterday. The volume of all futures traded was about 22% below the 100-day average. Prices have decreased 5.4% this year.
Brent for October settlement was down 13 cents at $97.95 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $4.85 to WTI, compared with $5.25 yesterday.
The IEA cut its forecasts for 2015 and said Saudi Arabia exported the least in almost three years as purchases slowed from China and Europe, according to a report yesterday. Demand will increase by 1.2 million barrels a day, or 1.3%, to 93.8 million barrels a day next year, it said. The expansion is 165,000 barrels a day less than it predicted a month ago.
Oil prices are poised to decrease next year as US crude production reaches a 45-year high, the Energy Information Administration said Sept. 9. WTI will average $94.67 a barrel in 2015 versus the August projection of $96.08, the government forecaster said in its monthly Short-Term Energy Outlook. It trimmed its Brent crude estimate for next year to $103 from $105.
The Organization of Petroleum Exporting Countries expects it will need to pump an average of 29.2 million barrels a day of crude next year, 200,000 a day less than it forecast a month ago, the Vienna-based group said in its monthly market report Sept. 10. It boosted estimates for supplies from countries outside OPEC by the same amount.
The US will “deepen and broaden” measures against Russia’s financial, energy and defense industries, President Barack Obama said in a statement yesterday, hours after an announcement by the EU. The latest round of economic sanctions by the 28-member bloc will take effect today.
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