Oil held declines below $43 a barrel as weekly U.S. industry data showed crude stockpiles expanded, keeping supplies at the highest seasonal level in at least two decades.
Futures were little changed in New York after losing 0.6 percent Tuesday. Inventories rose by 2.09 million barrels last week, the American Petroleum Institute was said to report. Government data Wednesday is forecast to show stockpiles slid by 1.5 million barrels. The Energy Information Administration raised its U.S. output estimate for next year, according to its monthly report.
Oil has fluctuated after tumbling more than 20 percent into a bear market and closing below $40 a barrel last week for the first time in almost four months. While there is an inventory overhang of U.S. crude and fuel stockpiles, Goldman Sachs Group Inc. forecasts the market will be in modest deficit in the second half of this year and the EIA sees consumption outpacing supply in 2017.
“The crude supply overhang is going to keep the price from rallying too strongly,” said David Lennox, a resources analyst at Fat Prophets in Sydney. “Its trend is in the right direction, which is down from its peak, but there’s still more than 500 million barrels stockpiled. Until we see supplies return to historical averages, significant price gains will be capped.”
West Texas Intermediate for September delivery was at $42.74 a barrel on the New York Mercantile Exchange, down 3 cents, at 1:16 p.m. Hong Kong time. The contract lost 25 cents to $42.77 on Tuesday. Total volume traded was about 50 percent below the 100-day average.
U.S. Stockpiles
Brent for October settlement was 2 cents higher at $45 a barrel on the London-based ICE Futures Europe exchange. The contract fell 0.9 percent to $44.98 on Tuesday. The global benchmark crude traded at a premium of $1.53 to WTI for October.
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U.S. gasoline stockpiles dropped by 3.95 million barrels last week, the API said Tuesday, according to a person familiar with the figures. The EIA report Wednesday is forecast to show inventories of the motor fuel decreased by 1.3 million barrels, according to the median estimate in a Bloomberg survey.
Oil-market news:
The EIA forecasts 2017 U.S. output averaging 8.31 million barrels a day in 2017, up from a July estimate of 8.2 million, according to its Short-Term Energy Outlook released Tuesday. Saudi Arabia kept its full contractual crude supplies to Asia for September, according to three officials at the region’s refiners. Venezuela plans to add 1 million barrels of new oil storage, according to an e-mailed statement from PDVSA.
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