West Texas Intermediate crude dropped for a third day as U.S. oil inventories gained unexpectedly. Brent rose in London.
Futures fell as much as 1 percent in New York. Ecuador and Venezuela will ask members of the Organization of Petroleum Exporting Countries to reduce excess output, an Ecuador official said.
U.S. crude inventories expanded by 3.7 million barrels last week, countering forecasts expecting a drop, the American Petroleum Institute said Monday. The Department of Energy’s stockpile figures will be published later Wednesday.
Oil has collapsed into a bear market as the U.S. pumps at the fastest pace in more than three decades amid signs of slowing demand. Leading OPEC producers including Saudi Arabia and Kuwait are resisting calls to cut output ahead of a Nov. 27 meeting in Vienna. The 12-member group supplies about 40 percent of the world’s oil.
“Crude oil prices extended sharp declines today following yesterday’s bearish API oil inventories report,” Myrto Sokou, senior analyst at London-based Sucden Financial Ltd., said by e-mail “We expect crude prices to remain under downward pressure with today’s DOE report likely to provide an further insight into current oil inventories. Further ahead all eyes are on OPEC, with the situation looking uncertain about a production cut.”
WTI for December delivery, which expires tomorrow, dropped as much as 73 cents to $73.88 a barrel in electronic trading on the New York Mercantile Exchange and was at $74.52 at 9:50 a.m. London time. The more-active January future was down 11 cents at $74.53. Total volume was about the same as the 100-day average. Prices have decreased 24 percent this year.
Brent for January settlement was 40 cents higher at $78.87 a barrel on the London-based ICE Futures Europe exchange. The contract slid 84 cents to $78.47 yesterday. The European benchmark crude traded at a premium of $4.32 to WTI today.
Saudi Arabia, OPEC’s biggest member, reduced its crude and products exports to about 7.51 million barrels a day in September, Barclays Plc analysts including Miswin Mahesh said in an e-mailed report yesterday, citing the Joint Organisations Data Initiative.
“This represents the third consecutive month of declines in total petroleum exports, coinciding with when the price declines started to take shape,” the bank said.
OPEC pumped 30.97 million barrels a day in October, exceeding its collective output target for a fifth straight month, data compiled by Bloomberg show.
“Without OPEC intervention, we could see another $10 to $11 lost from the price,” said David Lennox, a resource analyst at Fat Prophets in Sydney, who predicts OPEC will maintain its production target of 30 million barrels a day that was agreed in January 2012. “We think there will be cuts to excess output, and it will be the Saudis.”
In the U.S., crude inventories expanded by 3.7 million barrels in the week ended Nov. 14, the industry-funded American Petroleum Institute reported yesterday, Bain Energy said. Data from the Energy Information Administration today may show stockpiles shrank by 1.5 million, according to the median estimate in a Bloomberg News survey of 11 analysts.
A bill to approve TransCanada Corp.’s $8 billion Keystone XL pipeline was rejected by the Senate after years of political fighting over jobs, climate change and energy security. The facility, proposed in 2008, would have the capacity to carry 830,000 barrels a day of crude and connect Alberta’s oil sands to the U.S. Gulf Coast via Montana, South Dakota and Nebraska.
Horizontal drilling and hydraulic fracturing have drawn supplies from previously inaccessible formations in Texas and North Dakota, propelling U.S. output to 9.06 million barrels a day, the most in weekly EIA data that began in January 1983. Production growth may stall if prices fall to $60 a barrel, said Adam Sieminski, the administrator of the Energy Department’s statistical arm.