West Texas Intermediate fell for a sixth day, the longest losing streak since May 2012 as world powers made progress in drafting a peaceful resolution to the U.S.-Syria conflict, while the Iranian government sought to begin talks with major world powers on its nuclear program. A bearish U.S. crude stocks report on Wednesday further pressured prices.
On the New York Mercantile Exchange, WTI crude for delivery in November fell by 0.20% to $102.46 a barrel at 6:53 GMT. Prices held in range between days high of $102.61 and low at $102.21 a barrel, near yesterdays 12-week low. Light, sweet crude settled at $102.66 yesterday, the lowest closing price since July 3, and marked a 1% daily decline, extending its weekly loss to over 2.1%.
Meanwhile on the ICE, Brent oil for delivery in November fell by 0.04% to $108.28 a barrel at 6:54 GMT. The contract ranged between days high and low of $108.42 and $107.89 a barrel. The European benchmark slipped 0.6% on Wednesday and extended its weekly decline to over 0.8% after shedding 5.8% in the preceding two five-day periods.
Oil prices were pressured yesterday following an unexpected rise in U.S. crude reserves. The Energy Information Administration reported that U.S. crude stockpiles rose by 2.6 million barrels to 358.3 million in the week ended September 20 and moved toward the upper range for this time of the year. Analysts surveyed by Bloomberg expected inventories to decline by 1 million barrels, or 0.3%, to an 18-month low.
Refineries operated at 90.3% of their operable capacity last week, marking a 2.2% decline from the previous reading. Expectations were for a 0.9% fall to 91.6%. Both gasoline and distillate fuel production dropped last week and averaged 9.0 million and 4.8 million barrels per day last week.
The Energy Information Administration also reported that motor gasoline supplies rose by 217 000 barrels to 216.2 million and remained in the upper half of the average range for this time of the year. Analysts surveyed by Bloomberg expected a drop of 750 000 barrels. Meanwhile, distillate fuel inventories decreased by 234 000 barrels, underperforming projections for a 925 000 drop, but remained near the lower limit of the average range.
David Lennox, a resource analyst at Fat Prophets in Sydney, said for Bloomberg: “The oil price is drifting back down, which again indicates that supply is adequate and demand is muted. “In the short term, yes, the oil market’s reacting to the EIA numbers. But we’re not seeing crude prices below $100 yet.”
Syria, Iran
The oil market was also pressured amid receding fears that military action against Syria might spread the conflict over the entire Middle East region, which accounts for a third of global oil output. Delegates from the five permanent U.N. Security Council members, the U.S., U.K., Russia, China and France, have come to an agreement on the core of the resolution to put Syrias chemical arsenal under international control, although Russia denied that information and officials said that work was still going on.
Meanwhile, Irans new government said on Wednesday it seeks to begin as soon as possible talks with the major world powers on its long disputed nuclear program, which was the reason for Western sanctions against the OPEC member that have reduced its oil exports by more than 1 million barrels per day. Irans Foreign Minister Mohammad Javad Zarif will discuss the nuclear issue on Thursday with U.S. Secretary of State John Kerry, as well as officials from the other four permanent Security Council members and Germany.
Ben Le Brun, market analyst at OptionsXpress in Sydney, said for Bloomberg: “Overall the picture out of Middle East this week has been improving so thats why weve seen oil markets a little bit lower even though commodities have held up.”