On the New York Mercantile Exchange, October West Texas Intermediate crude fell $1.79, or 3.9%, to settle at $44.15 a barrel. October Brent crude on London’s ICE Futures exchange fell $1.94, or 3.9%, to $47.58 a barrel.
Both contracts saw their weakest settlement since Aug. 27. Overall, oil prices have fallen by around 17% so far this year. In a monthly report, the EIA said it expects WTI prices to average $49.23 a barrel this year, down from a previous forecast of $49.62. It also reduced its forecast to $53.57 for 2016, versus $54.42. For Brent, its 2015 forecast was at $54.07, down from the previous forecast of $54.40. Oil prices lost more ground after the report. They had been “getting ready to dip lower on any whiff of negativity,” said Richard Hastings, macro strategist at Global Hunter Securities. The EIA also said it expects U.S. crude-oil output of 9.22 million barrels a day this year, down from a previous estimate of 9.36 million barrels. It also cut its 2016 estimate by 1.5% to 8.82 million barrels a day.
Petroleum-supply data will be released a day late this week because of the Labor Day holiday. The American Petroleum Institute will release its report late Wednesday, while the EIA’s data comes out Thursday. Analysts polled by Platts forecast a rise of 300,000 barrels for crude supplies. Gasoline inventories are seen as unchanged, while distillate stocks, which include heating oil, are seen higher by 700,000 barrels. The Organization of the Petroleum Exporting Countries is “failing miserably at controlling the flow of global oil,” said analysts for The 7:00’s Report, which offers daily markets commentary. OPEC oil production inched lower in August to 31.26 million barrels a day, according to a survey by Platts, but was still above the cartel’s output ceiling of 30 million barrels a day. OPEC has also notified Indonesia that the country may rejoin the group as a member when OPEC next meets in December.
“Re-balancing of supply relative to demand will progress over the rest of this year, with markets also digesting potential rising production from Iran and evolving global economic data,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “For now, we believe prices [will] remain low for some time.”