Oil resumed its decline as industry data showed US crude stockpiles extended gains and as the International Energy Agency predicted new output from Opec’s rivals will exceed demand growth next year.
Futures lost as much as 1.6% in New York after rising 1.8% in the previous three sessions. The American Petroleum Institute signaled US inventories probably climbed a second week, ahead of data from the Energy Information Administration forecast to show a decline. New supplies from Opec’s competitors will be more than enough to meet growth in demand next year, the IEA said in a report on Wednesday.
Oil is extending its slump below $50 a barrel amid speculation rising US supplies will counter production curbs by the Organization of Petroleum Exporting Countries and allies including Russia. Output at major American shale fields will reach a record in July, according to the EIA.
“The market tightening intended by Opec has thus failed to materialize,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a report. “Opec will therefore have to cut production further next year to ensure that the oil market is not oversupplied.”
West Texas Intermediate for July delivery slid as much as 74 cents to $45.72 a barrel on the New York Mercantile Exchange, and was at $46.13 as of 8:28 a.m. local time. Total volume traded was 10 % above the 100-day average. Prices gained 38 cents to $46.46 on Tuesday.
Brent for August settlement lost as much as 70 cents, or 1.4%, to $48.02 a barrel on the London-based ICE Futures Europe exchange, after climbing 0.9% on Tuesday. The global benchmark crude traded at a premium of $2.13 to August WTI.
US crude inventories added 2.75 million barrels last week, while gasoline stockpiles increased by 1.79 million barrels, the API said Tuesday, according to people familiar with the data. The EIA is forecast to report crude stockpiles slid 2.45 million barrels and motor-fuel inventories dropped by 1.15 million barrels, according to the median estimate in a Bloomberg survey.
The US, Brazil, Canada and other producers outside Opec will increase output next year by the most in four years, the IEA said in its first forecast for 2018. As a result, the need for crude from Opec won’t be high enough for the group to reverse cuts it’s currently making to drain a global glut.
- Opec production rose more than 336 000 barrels a day in May from a month earlier to 32.14 million barrels a day, according to a monthly report from the group on Tuesday.
- China’s crude output in May fell 1.8% from the previous month to average 3.84 million barrels a day, the lowest since October, according to Bloomberg calculations based on data on Wednesday from the National Bureau of Statistics.
- Oil stockpile draws will accelerate in the second half of 2017, according to BP chief economist Spencer Dale.
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