NEWS

Oil prices fell Thursday, after the International Energy Agency reported a monthly rise in global crude supplies, but finished off the session’s lows as a U.S. government report showed that domestic crude stockpiles fell for a third week in a row.

“Stronger refining activity, ongoing subdued Gulf Coast imports and robust crude exports have encouraged a counter-seasonal draw,” Matt Smith, director of commodity research at ClipperData, told MarketWatch. But some analysts noted that the data were likely influenced by Hurricane Nate, which prompted the temporary shut in of as much as 85% of Gulf of Mexico oil production last week. The International Energy Agency also reported Thursday that global oil supply rose in September, while demand growth slowed.

November West Texas Intermediate crude the U.S. price gauge, fell 70 cents, or 1.4%, to settle at $50.60 a barrel on the New York Mercantile Exchange. It was trading at $50.25, near the session’s lows, before the supply data. December Brent crude the global benchmark, settled down 69 cents, or 1.2%, to $56.25 a barrel on ICE Futures Europe.

The U.S. Energy Information Administration Thursday showed that domestic crude supplies fell by 2.8 million barrels for the week ended Oct. 6. That was well above the forecast for a decline of 400,000 barrels by analysts surveyed by S&P Global Platts. Analysts in a Wall Street Journal survey had projected a 1.7 million-barrel decline. In contrast, the American Petroleum Institute reported late Wednesday an increase of 3.1 million barrels, according to sources. U.S. crude production, meanwhile, declined by 81,000 barrels a day to 9.48 million barrels, the EIA said. The report “was another one with distorted data thanks to weather, this time Hurricane Nate,” said Tyler Richey, co-editor of the Sevens Report. “A large number of oil rigs in the Gulf were shut as a precaution ahead of the storm and evacuated.”

Still, on Wednesday, the EIA forecast total U.S. crude-oil production would average 9.9 million barrels a day in 2018, which would mark the highest annual average production in U.S. history. Gasoline stockpiles were up 2.5 million barrels for the week, while distillate stockpiles fell 1.5 million barrels, according to the EIA. The S&P Global Platts survey forecast drops of 1.4 million for gasoline and 1.64 million for distillates.

Among refined products on Nymex, November gasoline lost 2.6 cents, or 1.6%, to $1.583 a gallon and November heating oil settled at $1.766 a gallon, down 2.1 cents, or 1.2%.

Global oil supply growth in September was mainly driven by production in the U.S., despite disruptions caused by the hurricane season, as well as output in the North Sea and Kazakhstan, the IEA said in its closely watched monthly report. The agency estimates that global production rose by 90,000 barrels a day last month from August, to 97.5 million barrels a day. The IEA said OPEC’s output was unchanged in September. The agency said OPEC and other producers outside the group, including Russia, have largely held to an agreement to withhold almost 2% of global oil supply from the market. The IEA estimated that OPEC’s compliance with the deal stood at 86% in 2017.

Loren R. Bailey, President
Fuel Manager Services Inc

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