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)

  • Most Popular
  • Most Shared

Pending Reform

REUTERS SHOWCASE

Power Theft

Power Theft

India to invest $4 billion to tackle power theft  Full Article 

Debt Funds

Debt Funds

India monitors foreign flows into debt funds, may tighten rules  Full Article 

Bulgari Back in India

Bulgari Back in India

CEO: we shouldn’t have left India so we’re back  Full Article 

 Hindu "Modi-fication"

Hindu "Modi-fication"

Fears grow about Hindu "Modi-fication" of education  Full Article 

Weak Credit

Weak Credit

Hard to hit tax revenue target, credit weak - Jaitley  Full Article 

China Rate Cut

China Rate Cut

China surprises with interest rate cut to spur growth  Full Article 

Gold Imports

Gold Imports

RBI cautious on response to gold import surge  Full Article 

Economic Corridor

Economic Corridor

China commits $45.6 billion for economic corridor with Pakistan  Full Article 

Overseas Funds

Overseas Funds

RBI says overseas borrowed funds can be parked with banks in India  Full Article 

Reuters India Mobile

Reuters India Mobile

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