Oil prices fell on Tuesday, extending losses into a third week, on
worries over a supply glut and with U.S. inventory data expected to show
another increase in crude stocks.
Brent for December delivery fell 1.76% to $46.71.
U.S. crude dropped 2.48% to $42.89 a barrel.
An expected further build in U.S. crude stocks and a glut of refined products again raised concerns of a glut in the market. The focus of the oil markets is rapidly shifting to the surplus of refined products, say analysts. The bearish sentiment was aggravated by dropping refining profitability while demand growth slowed.
Unfortunately, lower U.S. production - from a peak of around 9.6 million barrels a day to around 9.1 million - and optimism over demand have failed to positively impact prices.
According to Reuters surveys, U.S. commercial crude stockpiles are expected to have risen for a fifth straight week, by an average of 3 million barrels to 479.6 million, in the week ended Oct. 23.
Goldman Sachs said earlier that stocks of
distillates, which include diesel and jet fuel, were seen dipping by 2
million barrels, storage utilization for distillates in the United
States and Europe is nearing historic highs.
The news that U.S. congressional leaders had proposed to sell 58 million barrels of oil from U.S. emergency reserves to help pay for a budget deal, while the sales would happen only between fiscal years 2018 and 2025.
In a longer perspective, non-OPEC supply
could fall in 2016 for the first time since 2008 as deep cuts in
capital expenditure by publicly traded businesses lead to a 700,000
barrels-per-day fall in production to 52.7 million bpd.
The Energy Aspects think-tank added that some 5 million bpd of projects, which were meant to be completed from 2017-19, had been postponed or canceled, saying that it will start to show up in sharp declines in 2017 supplies.
Meanwhile, oil prices could be buoyed by short-covering if investors think the Fed will take a dovish view towards interest rates at its meeting.
