DTN Oil Update
Oil Drops to 4-Month Low as Fundamentals Trounce Supply Risks
VIENNA (DTN) -- Oil prices extended their decline into a fourth trading day as the prospects of new OPEC production hikes weighed on sentiment in a market that already looked to be oversupplied by the year-end.
In Thursday morning, Oct. 2, trade, NYMEX-traded WTI crude for November delivery fell $0.31 to $61.47 bbl, after a fourth-month low at $61.22.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
ICE Brent crude for December delivery retreated $0.36 to $64.99 bbl, after hitting $64.81, its lowest since June.
Among oil products, November RBOB gasoline futures slid $0.0095 to $1.8764 gallon, and the front-month ULSD contract softened $0.0283 to $2.2736 gallon.
The U.S. Dollar Index remained relatively unchanged, down 0.04 points to 97.70 against a basket of foreign currencies.
Sluggish macroeconomic indicators released this week suggested a grow rate at which the market will struggle to absorb extra barrels from OPEC+. East Asian manufacturing PMIs released this week showed the region's industrial sectors stagnating, with the indices for September hovering close to the 50-point mark.
In the U.S., consumer confidence slipped to a three-month low in September, as a key index monitored by the Conference Board slid 3.6 points to 94.2 from a revised 97.8 in August. The U.S. federal government shutdown added to concerns over slowing demand growth, exacerbating the bearish sentiment.
Oil futures have been trading in a narrow range for months, caught in a tug-of-war between weak market fundamentals and geopolitical risks.
The restart of northern Iraq's 200,000-bpd Kirkuk-Ceyhan pipeline comes ahead of Sunday's, Oct. 5, OPEC meeting, that is likely to result in more output from the 23-nation producer group which will be discussing production quotas for November.
A slew of fresh economic data also points to weak demand growth for energy, skewing the market's attention towards the risk of rapidly growing global oil inventories.
The Energy Information Administration on Wednesday, Oct. 1, reported higher commercial crude oil inventories, as well as a surprisingly large 4.1 million bbl build in gasoline stocks for the week ending Sept. 26.