Market Close: Oct 04 Mixed

Crude-oil prices extended losses into a third session on Wednesday, giving up earlier gains seen in the wake of a much-larger-than-expected weekly drop in U.S. crude supplies.

There didn’t appear to be any one particular reason for the turn lower in prices. “There are plenty of times when there is no good reason for an increase or decrease,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. “It’s a noisy uncertain market.”

Bloomberg reported that Libya has restarted its largest oil field. Concerns had emerged over output from the country, a member of the Organization of the Petroleum Exporting Countries, after gunmen forced a shutdown of the field over the weekend. Traders also fretted over flagging compliance in an oil-producer with a key production-cut agreement, amid growing speculation that parties to the OPEC-led pact will extend it past March 2018.

November West Texas Intermediate crude shed 44 cents, or 0.9%, to settle at $49.98 a barrel on the New York Mercantile Exchange, after trading high as $50.67 shortly after the supply data release. Prices marked their lowest finish and first settlement below $50 since Sept. 19, according to FactSet data. December Brent crude the international benchmark, lost 20 cents, or 0.4%, to $55.80 a barrel on ICE Futures Europe.

A report from the U.S. Energy Information Administration Wednesday said domestic crude supplies fell by 6 million barrels for the week ended Sept. 29. That marked a second straight weekly decline and analysts surveyed by S&P Global Platts had forecast a much smaller decrease of 1.5 million barrels. The American Petroleum Institute late Tuesday reported that supplies fell by 4.1 million barrels in the latest week.

The draw in crude stocks was “driven by record crude exports on the U.S. Gulf Coast amid subdued waterborne imports, as refineries [continue to] deal with the aftermath of Hurricane Harvey,” which hit the region in late August, said Matt Smith, director of commodity research at ClipperData.

Kloza told MarketWatch that the U.S. exported 13.888 million barrels of crude last week and that he believes that the number may “soon surpass” 15 million barrels a week. “It’s the most key element of the EIA report and it should inspire a narrowing of Brent premium to WTI,” he said.

Gasoline stockpiles were up 1.6 million barrels for the week, while distillate stockpiles fell 2.6 million barrels, according to the EIA. The S&P Global Platts survey called for a climb of 1.5 million barrels for gasoline and decline of 2.4 million barrels for distillate supplies. “Distillate inventories are an ongoing bullish theme, showing another solid draw, now 16% below year-ago levels,” Smith said. “In contrast, gasoline stocks built, and are less than 4% below 2016 levels.”