Oil ends sharply lower thursday as IEA pegs global supplies at a record and Hurricane Florence weakens
By Mayra P. Saefong
Petroleumworld 09 13 2018
Oil futures fell sharply on Thursday, with U.S. benchmark prices dropping back from the nearly two-month high seen a day earlier, as an industry report showed global supplies at a record and Hurricane Florence weakened ahead of its expected landfall on the East Coast.
In a closely followed monthly report, the International Energy Agency said daily crude-oil output in the Organization of the Petroleum Exporting Countries climbed in August by 420,000 barrels a day, to average 32.63 million a day.
That output more than made up for an expected decline in Iranian supply due to extant and pending U.S. economic sanctions.
The August report also signaled that global supplies hit a record of 100 million barrels a day.
October futures on West Texas Intermediate crude CLV8, +0.25% the U.S. benchmark, fell $1.78, or 2.5%, to settle at $68.59 a barrel, a day after marking the highest settlement since July 20 at $70.37, according to Dow Jones Market Data. November Brent LCOX8, -0.04% gave up $1.56, or 2%, to $78.18 a barrel on ICE Futures Europe. Wednesday's settlement for the global benchmark was the highest since May.
The IEA report is “encouraging profit-taking,” Michael Lynch, president of Strategic Energy & Economic Research, told MarketWatch.
It highlighted the ramp-up in global supplies and OPEC's largest month-on-month increase in more than two years, bringing the supply from the group's 15 producers to a nine-month high. The increase mainly came from higher production in Libya, Iraq, Nigeria and Saudi Arabia—the de facto head of OPEC.
“Both the suggestion that economic growth in non-OECD countries is at risk, and the strong supply report, including robust non-OPEC production and increases from Iraq, Libya and Nigeria, are offsetting worries about Iranian exports,” Lynch said.
The data also backs the monthly report from OPEC released Wednesday, which also showed that members of the oil cartel boosted total output last month .
The IEA report came a day after the Energy Information Administration revealed that domestic U.S. crude supplies fell by a more than expected 5.3 million barrels for the week ended Sept. 7.
Concerns about expected disruptions to supply have underpinned recent crude-price gains. Renewed U.S. sanctions on Iran that take full effect in early November are expected to sharply curtail exports by the Middle Eastern nation.
Meanwhile, market participants have also been watching Hurricane Florence, which was downgraded over the Atlantic Ocean late Wednesday to a Category 2 storm. Even so, it is expected to remain an “extremely dangerous major hurricane” when it nears the coast late Thursday and Friday, according to the National Hurricane Center .
The storm, which is on track to disrupt the Carolinas and Virginia , has the potential to cause disruptions to the flow of fuel through the key Colonial Pipeline, which moves gasoline and diesel from Houston through states in the Southeast, including the Carolinas, to Linden, N.J.
Fuel-price tracker GasBuddy reported some shortages of gasoline at stations in four states.
On Nymex, October gasoline RBV8, +0.04% fell 2.1% to $1.993 a gallon, while October heating oil HOV8, +0.00% shed 1.5% to $2.224 a gallon.
October natural gas NGV18, -0.32% lost 0.4% to $2.817 per million British thermal units, holding on to earlier modest gains.
The EIA reported Thursday that domestic supplies of natural gas rose by 69 billion cubic feet for the week ended Sept. 7—generally in line with the climb of 70 billion expected by analysts polled by S&P Global Platts.
—Christopher Alessi contributed to this article
Story by Mayra P. Saefong
from Market Watch.
marketwatch.com 09 13 2018 19:10 GMT
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