Oil set for sixth straight day of declines

Send a link to a friend  Share

[November 04, 2016]  By Julia Payne

LONDON (Reuters) - Oil prices were on course for their sixth straight day of falls on Friday, dragged lower by a surge in U.S. crude inventories, timid demand and doubts over the ability of producers to coordinate output cuts.

Brent crude futures <LCOc1> were at $46.18 per barrel at 0656 ET, down 17 cents from their last close. U.S. West Texas Intermediate (WTI) futures <CLc1> were down 2 cents at $44.65 a barrel.

The dips put crude on the longest losing run since June and, before that, since January, with Brent shedding almost 14 percent since its recent peak in mid-October.

"There has been a very strong retreat and technically, prices are starting to reach oversold levels," Olivier Jakob of consultancy Petromatrix said.

Analysts said markets were also weighed down by traders pulling out money from futures ahead of the U.S. presidential election, which is seen as a risk to markets.

Global share prices fell to their lowest levels since early July on Friday on uncertainty over the election outcome.

"Investors will look at U.S. non-farm payrolls later in the day but I think there will be a pause for a few days ahead of the U.S. elections," Jakob said.

Beyond election concerns, traders said fundamentals were weak, with U.S. crude stocks surging, demand growth low, and doubts that the Organization of the Petroleum Exporting Countries and non-OPEC producer Russia can agree on a meaningful output cut this month.

North Sea crude exports are also set to rise significantly in December, adding to a surplus of light, sweet grades in the market. The sudden outage of some 200,000 barrels per day of alternative light Nigerian crude on Wednesday garnered only mild attention.

While oil production remains near records and inventories are high, British bank Barclays said demand growth was timid.
 

[to top of second column]

An oil well pump jack is seen at an oil field supply yard near Denver, Colorado, U.S., February 2, 2015. REUTERS/Rick Wilking/File Photo


Demand growth over July-September was less than a third that of the year-ago quarter, Barclays said in a note, estimating last quarter's growth below 1 million barrels per day (bpd).

The consumption rise for the last quarter will not be much higher, before averaging 1.3 million bpd in 2017, it added.

In the United States, crude oil stockpiles soared more than 14 million barrels last week, the largest build on record, highlighting that a global fuel supply overhang is far from over.

Also in the United States, the Colonial Pipeline carrying gasoline, which was disrupted this week by an explosion, is expected to restart Line 1 on Sunday afternoon.

(Reporting by Julia Payne; Editing by Dale Hudson)

[© 2016 Thomson Reuters. All rights reserved.]

Copyright 2016 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Back to top