Oil futures settled lower Thursday, as worries about the global glut of supplies helped to send U.S. prices near a 4-month low under $49 a barrel.
September West Texas Intermediate crude fell 74 cents, or 1.5%, to settle at $48.45 a barrel on the New York Mercantile Exchange, the lowest since March 31. September Brent crude on London’s ICE Futures exchange shed 86 cents, or 1.5%, to $55.27 a barrel. Nymex oil lost 3.3% Wednesday and has fallen more than 18% this month.
Weekly U.S. crude-oil inventories unexpectedly rose by 2.5 million barrels, according to data from the U.S. Energy Information Administration Wednesday. Overall North American oil production, driven by the U.S. shale boom and Canadian exports, is contributing to much of the oil glut. At the same time, production from members of the Organization of the Petroleum Exporting Countries continues to grow. “The OPEC production growth has stoked market fears of further oversupply, as crude stocks in Europe and Asia show signs of building,” Michael Wittner, head of oil research at Société Générale, said in a report. OPEC added nearly 600,000 barrels a day of production from May to June, mostly due to increased supply from Saudi Arabia and Iraq, SocGen said. But Tyler Richey, co-editor of The 7:00s Report, pointed out that the latest EIA inventory report showed that crude-oil output in the lower 48 states was “largely unchanged” for the week. “This suggests that the recent bearish trend of rising U.S. oil output is moderating,” he said. “This is a fundamentally supportive influence for prices in the near term.”
Meanwhile, the World Bank nudged up its 2015 forecast for crude-oil prices to $57 a barrel from a previous forecast of $53 in April, after oil prices rose 17% in the April-June quarter. However, it expects energy prices to average 39% below 2014 levels. Global oil demand in 2016 is projected to slow even further to 1.2 million barrels a day or 1.3%, the World Bank said.
Natural-gas futures finished lower after the EIA on Thursday reported that supplies of natural gas rose by 61 billion cubic feet for the week ended July 17. Analysts polled by Platts forecast a climb of 67 billion cubic feet to 71 billion cubic feet. The EIA said a “reclassification” of some of the data resulted in a decrease in working-gas stocks of about 7 billion cubic feet in the East region, and that essentially means that the weekly increase was more like 68 billion, according to Citi Futures’ Tim Evans. August natural gas settled at $2.816 per million British thermal units, down 8.1 cents, or 2.8%.