Brent crude traded near the lowest close in more than a week as the International Energy Agency changed its view on global oversupply, seeing a glut persisting into 2017.
Futures were little changed in London after dropping 2.5 percent on Tuesday. The surplus will last longer than previously thought as demand growth slumps, the IEA said. U.S. crude stockpiles increased by 1.44 million barrels last week, the industry-funded American Petroleum Institute was said to report. Energy Information Administration data Wednesday is forecast to show supplies rose by 4 million barrels as the peak summer demand period ends.
Oil has fluctuated since rallying in August amid speculation the Organization of Petroleum Exporting Countries and Russia would agree on measures to stabilize the market at a meeting later this month. Record output from OPEC’s Gulf members is compounding the global glut, the IEA said Tuesday. The agency last month predicted the market would return to equilibrium this year.
“The focus of the market is squarely on supply,” said Evan Lucas, a market strategist at IG Ltd. in Melbourne. “While the OPEC meeting will be important, nobody really expects them to do anything. They’re talking down the idea of raising supply, but if you look at the numbers, all they have done is increase.”
Brent for November settlement was at $47.26 a barrel on the London-based ICE Futures Europe exchange, up 16 cents, at 10:20 a.m. in Hong Kong. The contract fell $1.22 to $47.10 on Tuesday, the lowest close since Sept. 2. The global benchmark was at a $1.60 premium to West Texas Intermediate for November.
WTI for October delivery was 21 cents higher at $45.11 a barrel on the New York Mercantile Exchange. The contract slid $1.39 to close at $44.90 Tuesday. Total volume traded was 21 percent below the 100-day average.
For a story on the possible outcome of the OPEC meeting this month, click here.
Consumption growth sagged to a two-year low in the third quarter as demand faltered in China and India, while record output from OPEC’s Gulf members is compounding the glut, the IEA said in its monthly report Tuesday. The agency trimmed projections for global oil demand next year by 200,000 barrels a day to 97.3 million a day.
U.S. gasoline stockpiles fell by 2.39 million barrels last week, the API said Tuesday, according to people familiar with the data. China’s crude oil imports may rise further in the coming months as tumbling domestic output leaves refiners looking overseas for supplies, according to analysts from Natixis SA and Energy Aspects Ltd.
By Ben Sharples.