New York - Oil’s biggest rally in a week stalled on speculation that increased OPEC output will extend a global supply surplus.
Futures fell as much as 1.1 percent in New York after rising 1.8 percent on Tuesday. Iraq, the second-biggest member of the Organisation of Petroleum Exporting Countries, said a production boost was important to meet the needs of its growing population, while Angola will export the most crude in four years during October, according to a preliminary loading program obtained by Bloomberg.
Oil has tumbled more than 30 percent since this year’s closing peak in June amid signs that producers are maintaining output even after a surplus pushed prices into a bear market. While US crude stockpile data due Wednesday is projected to show a decline for a fourth week through August 14, inventories will remain more than 90 million barrels above the five-year average for this time of year.
“Supply is currently outweighing demand by far,” Michael Poulsen, an analyst at Global Risk Management in Middelfart, Denmark, said by e-mail. “It will take another few years before demand surpasses supply - all else being equal-- though of course prices may react before then.”
WTI drops
West Texas Intermediate for September delivery, which expires Thursday, fell as much as 46 cents to $42.16 a barrel on the New York Mercantile Exchange and was at $42.39 as of 11:57 a.m. London time. The contract gained 75 cents to $42.62 on Tuesday, rising from the lowest close in six years.
The volume of all futures traded was about 10 percent above the 100-day average. The more-active October contract slipped 26 cents to $42.86.
Brent for October settlement was little changed at $48.80 a barrel on the London-based ICE Futures Europe exchange. It gained 7 cents to $48.81 on Tuesday. The European benchmark crude traded at a premium of $5.91 to WTI for the same month.
OPEC, which supplies about 40 percent of the world’s crude, has pumped above its 30 million-barrel-a-day quota for more than a year, according to data compiled by Bloomberg. Angola plans to ship 1.83 million barrels a day in October, the most since November 2011, the loading program shows. That compares with 1.77 million barrels a day from Africa’s second-largest crude producer in September.
Iraq must increase oil output to meet the needs of its growing population and provide services, Prime Minister Haidar Al-Abadi said on his website. The nation’s production climbed to a record 4.18 million barrels a day in July, according to the International Energy Agency.
Crude stockpiles in the US, the world’s biggest oil consumer, probably shrank by 820,000 barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Wednesday. That would be the smallest decline since June 2014, according to EIA data.
BLOOMBERG