Oil headed for the longest run of weekly declines in almost three decades on signs the supply glut that drove prices to a six-year low will be prolonged.
Futures fell as much as 1.6 percent in New York, set for an eighth weekly drop. The U.S. pumped crude in July at the fastest pace for the month since at least 1920, the American Petroleum Institute reported Thursday. The nation’s stockpiles are almost 100 million barrels above the five-year seasonal average, weekly government data showed Wednesday.
Oil has slumped more than 30 percent since this year’s closing peak in June amid speculation the global surplus will persist. Leading members of the Organization of Petroleum Exporting Countries are maintaining output, while Citigroup Inc. predicts crude may slide to as low as $32 a barrel, a level last seen during the global financial crisis.
“It’s all about the oversupply,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said by e- mail. “Whereas in 2008 we had a demand shock causing the price crash, this time the crisis has been man-made, as OPEC inflates the surplus with overproduction.”
West Texas Intermediate for October delivery lost as much as 67 cents to $40.65 a barrel on the New York Mercantile Exchange and was at $40.83 at 1:48 p.m. London time. The volume of all futures traded was about 11 percent above the 100-day average. The September contract expired Thursday after rising 34 cents to $41.14. Prices have decreased 4 percent this week.
Brent for October settlement declined as much as 86 cents, or 1.8 percent, to $45.76 a barrel on the London-based ICE Futures Europe exchange. It’s down 6.6 percent this week. The European benchmark crude traded at a premium of $5 to WTI, compared with a front-month spread of $6.55 on Aug. 14.
U.S. crude output climbed 8.8 percent from a year earlier to 9.52 million barrels a day in July, the industry-funded API said in its monthly report. Production of liquids as a byproduct of natural gas drilling gained 10 percent to a record 3.37 million barrels.
OPEC’s two South American member nations are “outlining a single strategy to defend the position of oil-producing countries,” Venezuela’s Foreign Minister Delcy Rodriguez said Thursday on state television alongside his Ecuador counterpart Xavier Lasso. They plan to submit proposals to the Vienna-based group, which supplies about 40 percent of the world’s oil.
Algeria’s Energy Minister Salah Khebri wrote to OPEC members recommending the group consider measures for reviving oil prices and stabilizing the market, according to two delegates from the group familiar with the matter, who asked not to be identified because the letter hasn’t been made public. The letter also recommended consideration of an emergency meeting, one of delegates said.
OPEC pumped the most crude last month in more than three years as Iran restored output to the highest level since international sanctions were strengthened in 2012, according to the group’s monthly report. Output increased by 100,700 barrels a day to 31.5 million in July.
In China, a manufacturing gauge fell to the lowest level in more than six years, signaling the economy may need further policy support to stem a deepening slowdown. The preliminary Purchasing Managers’ Index from Caixin Media and Markit Economics was at 47.1 for August. The Asian nation is the world’s largest oil consumer after the U.S.
Nineteen of 41 analysts and traders, or 46 percent, were bearish on WTI in a Bloomberg survey Thursday. Ten were bullish on futures while 12 said they’re neutral.
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