Oil headed for a second weekly decline in New York, trading near its lowest level in two months, as US crude stockpiles rose three times more than forecast and the IEA said inventories in developed nations have reached a record.
West Texas Intermediate futures have lost 6.% this week. Oil stockpiles have swollen to a record of almost 3 billion barrels because of strong production in OPEC and elsewhere, the International Energy Agency said in its monthly market report yesterday.
US inventories climbed by 4.22 million barrels last week compared with an anticipated gain of 1.3 million, according to the Energy Information Administration.
Crude has dropped about 45% in the past year amid speculation the oversupply will be prolonged as the OPEC members continue to pump above its collective quota. US stockpiles remain more than 100 million barrels above their seasonal average.
“It now seems only a question of time before it drops below the $40 per barrel mark,” analysts at Commerzbank AG in Frankfurt including Carsten Fritsch said in a report.
“The oversupply on the US oil market remains high. The oversupply is also causing levels to rise outside the US.”
West Texas Intermediate for December delivery was at $41.62 a barrel on the New York Mercantile Exchange, down 13 cents, at 1:13 p.m. London time. The contract dropped $1.18, or 2.8%, to $41.75 on Thursday, the lowest close since August 26. The volume of all futures traded was about 10% above the 100-day average.
Brent for December settlement, which expires Friday, was 38 cents higher at $44.44 a barrel on the London-based ICE Futures Europe exchange. The more-active January contract added 31 cents to $45.50. The European benchmark crude was at a premium of $2.83 to WTI.
“The news from the IEA shows what a staggering amount of oil is sitting in storage,” Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC, said by phone.
“It’s also looking like Iran will initiate a production and price war with Russia and Saudi Arabia as it tries to regain market share.”
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest oil-storage hub in the US, expanded by 2.24 million barrels through Novemeber 6.
That’s the first increase in four weeks and the biggest gain since March. Output rose by 25,000 barrels a day to 9.19 million a day.
Total oil inventories in developed nations increased by 13.8 million barrels to about 3 billion in September, a month when they typically decline, according to the IEA.
The pace of gains slowed to 1.6 million barrels a day in the third quarter, from 2.3 million a day in the second, although growth remained “significantly above the historical average.”
There are signs the some fuel-storage depots in the Eastern Hemisphere have been filled to capacity, it said.
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