Oil drops as swelling U.S. crude inventories signal ample supply
Pubdate：2018-10-17 11:38
Source：liyanping
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NEW YORK (Bloomberg) -- Oil declined on concerns that U.S. crude stockpiles are expanding at a rate not seen since early 2017 as American drillers lift output to unprecedented levels.
Futures fell as much as 1.1% in New York on Tuesday. Diplomatic tensions that threatened to disrupt ties between the U.S. and Saudi Arabia appeared to take a back seat to a government tally scheduled for Wednesday release that is forecast to show a fourth straight week of rising oil inventories. That would be the longest string of increases in 19 months.
“U.S. inventory data is absolutely responsible for the drop in oil and we should continue to see oil production breaking out to record highs just month over month in the U.S.,” said Phil Streible, senior market strategist at RJ O’Brien Associates.
Oil markets were roiled in recent days as the mystery over the disappearance of prominent Saudi critic Jamal Khashoggi deepened, drawing tit-for-tat threats of punitive action by the U.S. and the Saudi regime. On Monday, media reports emerged that said the kingdom was considering saying Khashoggi perished in a botched interrogation inside the Saudi consulate in Istanbul.
In the U.S., crude stockpiles probably rose by 2.5 MMbbl last week, based on the median of 10 estimates from analysts in a Bloomberg survey. Domestic refining rates probably declined, according to the survey, a signal of weakening demand as fuel-making companies idle some equipment for seasonal maintenance work.
West Texas Intermediate for November delivery fell 21 cents to $71.57/bbl on the New York Mercantile Exchange. Total volume traded Tuesday was about 13% below the 100-day average.
Brent for December settlement declined 22 cents to $80.56 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.16 premium to WTI for the same month.
The industry-funded American Petroleum Institute is scheduled to release its weekly count of stockpiles later Tuesday.
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