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U.S. oil prices at lowest in nearly 8 months Wednesday as domestic crude supplies climb for 7th week in a row

By Mayra P. Saefong

Petroleumworld 11 07 2018

Oil futures declined Wednesday, with U.S. prices settling at their lowest in almost eight months after a government report revealed that domestic crude supplies rose for a seventh week in succession, and gasoline stockpiles unexpectedly climbed.

The move follows deep losses in recent sessions, and come ahead of a meeting between members of the Organization of the Petroleum Exporting Countries and its allies this weekend that could result in supply cuts.

Oil traders were also looking on with interest at the midterm election outcome. A split in Washington may force the Trump administration to soften its hard-line stance on countries like Iran, some analysts say, while others noted that the Democratic control of the House may crank up the pressure on regulations that limit U.S. shale production.

U.S. benchmark West Texas Intermediate crude for December CLZ8, +0.08%  fell by 54 cents, or 0.9%, to settle at $61.67 a barrel on the New York Mercantile Exchange—posting an eighth straight session decline. The settlement was also the lowest for a front-month contract since mid-March, according to data from Dow Jones Market Data.

Global benchmark January Brent crude LCOF9, -0.18% slipped 6 cents, or less than 0.1%, to $72.07 a barrel on ICE Futures Europe—the lowest finish since Aug. 17.

On Wednesday, the Energy Information Administration said domestic crude supplies rose by 5.8 million barrels for the week ended Nov. 2. That marked a seventh consecutive week of gains.

Analysts surveyed by S&P Global Platts had forecast a rise of 1.9 million barrels, while the American Petroleum Institute on Tuesday reported an increase of 7.8 million barrels.

Gasoline stockpiles also climbed unexpectedly by 1.9 million barrels last week, while distillate stockpiles fell by 3.5 million barrels, according to the EIA. The S&P Global Platts survey had shown expectations for supply declines of 2.1 million barrels in gasoline and 2.03 million barrels for distillates.

On Nymex, December gasoline RBZ8, +0.07%  lost nearly 2.8% to $1.647 a gallon. That was the lowest front-month settlement since December 2017. December heating oil HOZ8, +0.11%  rose 2.2% to $2.237 a gallon.

December natural gas NGZ18, -0.68% settled unchanged at $3.555 per million British thermal. The contract has been choppy since it settled Monday at $3.567—the highest finish for a front-month contract since late January.

“If not for the risk on stance today after the midterm elections…we feel oil would be lower,” said Tariq Zahir, managing member at Tyche Capital Advisors. Given the rise in equity markets , “oil could catch a bid, but we feel this will be short lived as oil inventories are increasing—even to the stand point OPEC is talking about putting [production] cuts back on in 2019 due to the fear of oversupply.”

Both WTI and Brent futures have generally traded in the red following a sharp October selloff that pushed both the global and U.S. benchmarks into correction territory. The losses continued after the Trump administration granted waivers to allow eight nations to continue buying Iranian crude despite U.S.-driven economic sanctions against the Islamic Republic.

The renewed oil-focused economic sanctions on Tehran took effect Monday, but the Trump administration late last week announced temporary waivers to eight countries, which it identified this week as some of Iran's biggest oil buyers: China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey.

Investors are looking ahead to the possibility that Saudi Arabia—the de facto head of OPEC—could call for renewed production cuts when the cartel and its allies convene in Abu Dhabi on Sunday, a move that officials in Riyadh have hinted at. OPEC and 10 producers outside the cartel, led by Russia, agreed in late June to begin ramping up crude production after more than a year of holding back output.

However, OPEC's October crude output declined in October to 33.04 million barrels a day, according to an S&P Global Platts survey released Wednesday . That was down 30,000 barrels a day from September's 22-month high. The survey said OPEC member Iran saw a “dramatic” month-on-month fall of 210,000 barrels a day.



Story by Mayra P. Saefong from MarketWatch.

11 07 2018 19:15 GMT

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