Oil Falls for Second Day as U.S. Supplies Seen Expanding

03:26 PM @ Tuesday - 11 November, 2014
West Texas Intermediate fell for a second day as forecasts for a sixth weekly gain in U.S. crude stockpiles bolstered speculation that rising supply is outpacing demand. Brent slid in London.

Futures dropped as much as 0.7 percent in New York. Crude inventories in the U.S., the world’s biggest oil consumer, probably expanded by 1 million barrels last week, a Bloomberg News survey shows before a government report on Nov. 13. The Organization of Petroleum Exporting Countries won’t cut its collective output when it meets in Vienna this month and prices will stabilize once the surplus is absorbed, according to Kuwait Oil Minister Ali Al-Omair.

Crude is extending losses in a bear market amid signs that global supply is outpacing demand. Leading OPEC members are resisting calls to cut output and instead reducing export prices to the U.S., where they’re competing with the fastest pace of production in more than 30 years.

“There’s sufficient supply to meet demand,” said David Lennox, a resource analyst at Fat Prophets in Sydney who predicts OPEC will maintain its output target when it gathers on Nov. 27. “A substantial cut is needed to see prices rally.”

WTI for December delivery declined as much as 54 cents to $76.86 a barrel in electronic trading on the New York Mercantile Exchange and was at $77.19 at 2:48 p.m. Singapore time. The contract decreased $1.25 to $77.40 yesterday, the lowest close since Nov. 4. The volume of all futures traded was about 15 percent below the 100-day average. Prices are down 22 percent this year.

Crude Stockpiles

Brent for December settlement fell as much as 47 cents, or 0.6 percent, to $81.87 a barrel on the London-based ICE Futures Europe exchange. It dropped 1.3 percent to close at $82.34 yesterday, the lowest level since October 2010. The European benchmark crude traded at a premium of $4.90 to WTI.

U.S. crude stockpiles probably increased to 381.2 million barrels in the week ended Nov. 7, according to the median estimate in the Bloomberg survey of seven analysts before the Energy Information Administration’s report. That would be the highest since July.

The American Petroleum Institute in Washington is scheduled to publish separate supply data tomorrow. The industry group collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistical arm.

OPEC Production

OPEC, whose 12 members supply about 40 percent of the world’s oil, pumped 30.974 million barrels a day in October, data compiled by Bloomberg show. The group’s collective target of 30 million was set in January 2012.

Kuwait has no plans to cut its output, which is set to climb to 4 million barrels a day by 2020, Al-Omair said yesterday. It produced 2.85 million a day in October, on par with the United Arab Emirates and behind Saudi Arabia and Iraq among OPEC nations.

Iraq reduced its official selling price for crude shipments to the U.S. while raising costs for customers in Asia and Europe, following Saudi Arabia’s decision a week ago. OPEC’s second-largest producer is offering December cargoes of its Basrah Light grade to the U.S. at a discount to a Middle East benchmark, compared with a premium in the previous six months, according to State Oil Marketing Co., known as SOMO.
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