Oil Holds Below $44
How Long Will the Oil Glut Last?
Oil held below $44 a barrel amid speculation the global crude glut will expand as OPEC members Libya and Nigeria prepare to boost exports within weeks.
Futures fell as much as 0.6% in New York after losing 5.9% the previous two sessions. Libya’s state oil company on Wednesday lifted curbs on sales from three ports, potentially unlocking 300,000 barrels a day. Exxon Mobil Corp. was said to be ready to resume shipments of Nigeria’s biggest export grade. U.S. government data showed crude stockpiles fell 559,000 barrels last week, compared with a forecast gain in a Bloomberg survey.
Oil has fluctuated since rallying in August amid speculation the Organisation of Petroleum Exporting Countries and Russia would agree on measures to stabilise the market. The glut will last into 2017, longer than previously thought as demand growth slows, the International Energy Agency said Tuesday. Rigs targeting crude in the U.S. have had the biggest return to activity since oil began falling two years ago and Kazakhstan’s giant Kashagan field is expected to start output this year, adding to the oversupply.
“Concerns on oversupply continue to persist,” said Bjarne Schieldrop, chief commodities analyst at bank SEB AB in Oslo. “With a weak outlook from the IEA and the possibility for revived production in Libya and Nigeria, there is no need for more U.S. shale oil rigs back into the market.”
West Texas Intermediate for October delivery was at $43.44 a barrel on the New York Mercantile Exchange, down 14 cents, at 9:32 a.m. in London. The contract fell $1.32 to $43.58 on Wednesday, the lowest close since September 1. Total volume traded was about 27% below the 100-day average.
Brent for November settlement was 2 cents lower at $45.83 a barrel on the London-based ICE Futures Europe exchange. The contract dropped $1.25 to $45.85 on Wednesday. The global benchmark was at a premium of $1.81 to WTI for November.
Exxon has filled storage facilities at its Qua Iboe export terminal in Nigeria and is awaiting government clearance to resume shipments, a person familiar with the matter said Wednesday. Royal Dutch Shell Plc is scheduled to restart about 200,000 barrels a day of flow within days.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest oil-storage hub in the U.S., fell by 1.25 million barrels last week to 62.2 million, the Energy Information Administration said Wednesday. Kazakhstan sees oil at $35 a barrel in 2017-19 and $45 by 2021. Oil production is seen rising from 79.5 million tons next year to 86.5 million tons in 2021, Economy Minister Kuandyk Bishimbayev told parliament, citing a base-case scenario. Oil prices will become more volatile after next year amid under-investment in production and uncertain growth in demand, Suncor Energy Inc. Chief Executive Officer Steve Williams said.