Crude Oil Price Falls Sixth Day as Easing Disruptions Offset U.S. Stock Drop

LAGOS, Nigeria, Capital Markets in Africa: Oil fell a sixth day, heading for the longest run of declines since February on speculation that easing global supply disruptions will offset a decline in U.S. crude stockpiles and production.

Futures dropped as much as 1.7 percent in New York, sliding in tandem with industrial metals and global equities, after losing 6.3 percent the previous five sessions. Output in Canada is expected to ramp up this month after wildfires cut production. U.S. stockpiles dropped for a fourth week to 531.5 million barrels yet remain about 33 percent above the five-year seasonal average, the U.S. Energy Information Administration said Wednesday.

Oil’s 80 percent rally from a 12-year low in February is faltering on speculation that higher prices will encourage more output just as global supply disruptions ease. While output losses reached a five-year high amid outages in Nigeria, Canada, Libya and Iraq, Goldman Sachs Group Inc. says that the prospect of returning supply means the price recovery remains “fragile.”

“It is difficult for crude oil to move above $55 until we see larger stock draws,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland.

U.S. Stockpiles
WTI for July delivery fell as much as 79 cents to $47.22 a barrel on the New York Mercantile Exchange and was at $47.36 at 9:31 a.m. London time. Total volume traded was in line with the 100-day average. The contract slipped 48 cents to settle at $48.01 on Wednesday.

Brent for August settlement declined as much as 83 cents to $48.14 a barrel on the London-based ICE Futures Europe exchange. Prices on Wednesday dropped 86 cents, or 1.7 percent, to $48.97. The global benchmark crude traded at a 44-cent premium to WTI for August delivery.

U.S. stockpiles declined 933,000 barrels last week, EIA data showed. The drop was smaller than the 2.33 million barrel slide forecast in a Bloomberg survey. Crude inventories at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, rose to 66.5 million barrels.

Source: Bloomberg Business News