UPDATE 8-US oil settles at 3-month low as Cushing stocks build

Fri Oct 18, 2013 1:51am IST

* U.S. default averted but more talks needed soon

* U.S. encouraged by talks with Iran

* CFTC will not release COT report on Fri

* EIA to release oil data on Thursday, Oct. 24 (Updates to settlement prices. Adds details on market price moves.)

By Jeanine Prezioso

NEW YORK, Oct 17 (Reuters) - U.S. oil prices settled at their lowest level in more than three months on Thursday as stockpiles in the Cushing, Oklahoma, oil hub began to reverse a months-long decline, and as signs of progress in talks over Iran's nuclear program also pressured prices.

European Brent ended the day with the biggest one-day percentage loss in one month.

Oil lost ground as some dealers fretted over the economic fallout of the partial U.S. government shutdown in the world's largest oil consumer, even after Democrats and Republicans in Congress reached a temporary funding agreement.

Front-month December Brent crude settled $1.48 lower at $109.11 per barrel. U.S. oil ended $1.62 per barrel lower at $100.67, the lowest settlement price since July 2.

A combination of rising global oil supplies and weak refinery demand due to seasonal maintenance also weighed on prices.

Oil stocks at the Cushing, Oklahoma, oil storage hub rose by 836,798 barrels in the week to Oct. 11, data from energy intelligence company Genscape showed on Thursday. Industry data from the American Petroleum Institute released on Wednesday showed Cushing stocks rose for the first time since early July.

"I think yesterday's API build put a lot of pressure on the market," said Gene McGillian, energy analyst with Tradition Energy in Stamford, Connecticut.

Total U.S. crude stocks rose by 5.9 million barrels in the week to Oct. 11, more than double forecasts in a Reuters poll of analysts for a build of 2.2 million barrels. Government data on oil inventories was not available this week due to the shutdown.

The spread between the November and December U.S. oil futures contracts CLX3-Z3 widened further to 28 cents. Analysts had anticipated further widening of the first two U.S. oil contract months if stocks at Cushing built. The spread between Brent and WTI CL-LCO1=R widened as much as $8.93 a barrel and settled at $8.24 per barrel.

The build in Cushing underscores rising supply, especially from the United States, even as demand remains soft.

"We have an enormous amount of crude oil production worldwide, especially here, and tepid demand growth," said Sarah Emerson, managing director of Energy Security Analysis Inc in Wakefield, Massachusetts. "We're in a surplus market and that surplus is definitely going to start weighing on prices."

Signs of progress around talks over Iran's nuclear program also pressured prices. Years of sanctions have cut Iranian oil exports by more than 1 million barrels per day (bpd). The U.S. described two days of talks with Iran as the most serious and candid to date.

Some analysts have questioned whether Iran could quickly ramp up production even if sanctions are lifted swiftly.

"They're ready to export," Emerson said. "I think they could go up to 800,000 (bpd) or a million pretty quickly."

In the United States, President Barack Obama signed legislation overnight to reopen the government and put off a potential debt default, but U.S. lawmakers must iron out another deal early next year to raise the debt ceiling. Funding runs until Jan. 15.

Energy Information Administration (EIA) data, usually released weekly on a Wednesday, were not released this week due to the shutdown. The EIA said on Thursday it will publish weekly oil inventory data for week-ending Oct. 18 on Thursday, Oct. 24.

The U.S. Commodity Futures Trading Commission also will not release its weekly Commitments of Traders report on Friday.

(Additional reporting by Alexander Winning and Simon Falush in London and Manash Goswami in Singapore; Editing by William Hardy and Theodore d'Afflisio)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Popularity Poll

REUTERS SHOWCASE

Record Highs

Record Highs

Nifty touches record high; software stocks gain.  Full Article 

New Adviser

New Adviser

Arvind Subramanian likely to be chief econ adviser.  Full Article 

Pricing Mechanism

Pricing Mechanism

Govt sets up a four-member panel to re-examine gas pricing.  Full Article 

Royalty Rates

Royalty Rates

India to hike iron ore royalty, miners may struggle to pass on extra cost.  Full Article 

Diesel Deregulation

Diesel Deregulation

Oil ministry to seek Cabinet nod on diesel deregulation - sources  Full Article 

Commodities

Commodities

Gold near two-month low; set for weekly drop on interest rate fears  Full Article 

Reuters Exclusive

Reuters Exclusive

Apple iPhone 6 screen snag leaves supply chain scrambling   Full Article 

Helping Regional Mills

Helping Regional Mills

Govt raises sugar import duty to 25 pct from 15 pct.  Full Article 

Curbing Risks

Curbing Risks

RBI to lower ceiling on bank loans to a single corporate group.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage