Oil Dips as Report Shows Rising Stockpiles
(Bloomberg) -- Oil fell for a third day as an industry report showing rising stockpiles at America’s largest crude storage hub overshadowed signs that Saudi Arabia is willing to make deeper production cuts.
Futures in New York dropped as much as 0.7% after losing 2% over the previous two sessions. The American Petroleum Institute reported that inventories at Cushing, Oklahoma, rose by 1.22 million barrels last week, according to people familiar with the data. The kingdom is ready to reduce output more than agreed with other global producers, Nigeria’s petroleum minister said after a meeting with his Saudi counterpart, Prince Abdulaziz.
A deteriorating global economy weakened by the U.S.-China trade war has driven a 17% slump in crude since late April. That’s put the onus on the Organization of Petroleum Exporting Countries and allied producers to extend production cuts further to prop up prices, although there are questions over Russia’s participation. Saudi Arabia may need to consider deeper reductions with the U.A.E. and Kuwait if Russia abstains, Citigroup Inc. said in a note.
“The market is paying more attention to the level of American inventories, given that there are less concerns over geopolitical risks,” said Kim Kwangrae, a commodities analyst at Samsung Futures Inc. Signs that Saudi Arabia and Russia are at odds over more output cuts are also weighing on prices, he said.
West Texas Intermediate for December delivery declined 32 cents, or 0.6%, to $55.22 a barrel on the New York Mercantile Exchange as of 7:27 a.m. in London. The contract fell 0.5% on Tuesday.
Brent for December fell 22 cents, or 0.4%, to $61.37 a barrel on the London-based ICE Futures Europe Exchange after closing little changed the day before. The global benchmark crude traded at a premium of $6.15 to WTI.
The API report is in line with data released by Genscape Inc. earlier in the week, which showed inventories at Cushing rose by 1.5 million barrels. If confirmed by the Energy Information Administration figures due Wednesday, that would be a fourth straight week of gains at the storage hub. Meanwhile, nationwide stockpiles fell by 708,000 barrels last week, according to the API.
The OPEC+ grouping, which includes Russia, is due to meet in December to discuss whether to extend or deepen its current production-limiting agreement that expires in March.
--With assistance from James Thornhill.
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