West Texas Intermediate crude headed for the biggest weekly drop since January amid signs of a global glut. Brent, the benchmark grade for more than half the world’s oil, traded near a four-year low. WTI closed yesterday more than 20 percent below its June peak, a common definition of a bear market. Brent is down 22 percent over a similar period. Both benchmark crudes rose today after falling more than 2 percent, supported by a rebound in equities markets.
The world’s two most-traded crude futures are collapsing because demand growth is slowing at a time when output is expanding from countries including the U.S. and Russia, the largest suppliers outside OPEC. The Organization of Petroleum Exporting Countries increased oil production by the most in almost three years last month as Libyan output surged.
“The market is catching its breath after a week of collapse,” Mike Wittner, the head of oil market research at Societe Generale SA (GLE) in New York and the third-most accurate forecaster for WTI among analysts ranked by Bloomberg in the past eight quarters, said by phone. “The fundamentals are weak but don’t justify this. It’s concern about OPEC that’s got the market rattled.”
WTI for November delivery rose 43 cents, or 0.5 percent, to $86.20 a barrel at 1:59 p.m. on the New York Mercantile Exchange. The contract touched $83.59, the lowest level since July 3, 2012. The volume of all futures traded was 54 percent above the 100-day average for this time of day.
Brent Slips
Brent for November settlement gained 25 cents, or 0.3 percent, to $90.30 a barrel on the London-based ICE Futures Europe exchange. The contract reached $88.11, the lowest since December 2010. Volume was 37 percent higher than the 100-day average. The European crude traded at a $4.10 premium to WTI on ICE, up from $2.57 on Oct. 3.
The 14-day relative strength index for Brent was 20.5606 today and has been below 30 since Sept. 30, according to data compiled by Bloomberg. The 14-day RSI for WTI slipped to 29.2592. An RSI below 30 typically signals a market is oversold.
“These markets are tremendously oversold,” Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston, said by phone. “Even in the most bearish markets there’s an occasional bounce, while bullish markets retreat at some point. A pause doesn’t mean we can’t drop to $80 next week, or for that matter rebound.”
Higher Output
OPEC increased output by 402,000 barrels a day in September to 30.47 million, the group said in its monthly oil market report today. It was the biggest monthly gain since November 2011 and the largest production in more than a year. The organization predicted demand will accelerate in the next few months.
“The market’s very weak because there’s considerable oversupply,” Amrita Sen, chief oil market analyst at consultants Energy Aspects Ltd. in London, said by phone. “There’s no sign from OPEC that they’re cutting back.” Saudi Arabia and Iran, both OPEC members, are discounting their main crude export grades to Asian buyers by the most in almost six years, prompting speculation that some OPEC nations are competing for market share.
State-run National Iranian Oil Co. cut official selling prices of its crude to buyers in Asia for November, two people with knowledge of the pricing decision said yesterday. The decrease came a week after Saudi Arabia, the world’s largest oil exporter, reduced the price of Arab Light crude for Asia to the lowest since December 2008.
Market Share
“The potential that the Saudi-Iranian cuts will spiral into a full-scale fight for market share are a major worry,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. “We’ll have to see if Iraq follows with an OSP cut as well.”
U.S. oil output increased to 8.88 million barrels a day last week, the most since March 1986, according to the Energy Information Administration. Crude inventories in the world’s biggest oil consumer gained by 5.02 million barrels to 361.7 million in the week ended Oct. 3, the EIA, the Energy Department’s statistical arm, said on Oct. 8.
Russia increased output 0.7 percent to 10.61 million barrels a day last month, according to preliminary data from CDU-TEK, which is part of the Energy Ministry. The figure is within 0.3 percent of the post-Soviet record in January and is for crude and condensates.
IMF Forecast
The International Monetary Fund said on Oct. 7 that the global economy will expand by 3.8 percent in 2015, down from a July projection of 4 percent. The International Energy Agency in Paris lowered its oil-demand forecasts for this year and next in its monthly report on Sept. 11.
“There’s a little drama fatigue in the market,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “We’re going to probably trade around the bottom here for a bit.” November gasoline futures decreased 1.37 cents, or 0.6 percent, to $2.2612 a gallon on the Nymex. It reached $2.2267, the lowest since Dec. 1, 2010. Pump prices fell 1.4 cents to $3.24 a gallon nationwide yesterday, the least expensive since December, according to AAA, the largest U.S. motoring group.
Ultra low sulfur diesel for November delivery rose 2.99 cents, or 1.2 percent, to $2.5665 a gallon. It touched $2.5035 earlier, the lowest intraday price since Jan. 10, 2011.
OPEC’s Biggest Supply Boost Since ’11 Spurs Bear Market
OPEC increased oil production by the most in almost three years, helping to drive prices toward a bear market. Iran and Saudi Arabia offered their oil at the deepest discounts since 2008, adding to speculation that members of the group are competing for market share.
The Organization of Petroleum Exporting Countries, which supplies 40 percent of the world’s oil, increased output by 402,000 barrels a day in September to 30.47 million, the group’s Vienna-based secretariat said in a monthly report. Iran matched Saudi Arabia yesterday by cutting the price of its main export grade to Asia by $1 a barrel, according to two people with knowledge of the pricing decision.
Brent futures, the international benchmark, traded at a four-year low today. Saudi Arabia told OPEC it raised output 11 percent last month, adding to speculation it will seek to preserve its share of export markets. Crude production is mounting in the U.S., Russia and Libya, while the pace of demand growth is lower as the economy slows in China, the world’s second-largest oil consumer.
“It’s a fight for market share out there at the moment,” Ole Sloth Hansen, an analyst at Saxo Bank A/S, said by e-mail today. “OPEC will have to come up with something otherwise the market will view it as a free invitation to carry on selling.”
Libyan Return
OPEC production last month climbed by the most since November 2011 and was the highest in more than a year, the group’s data show. Libya bolstered supplies by 250,600 barrels a day to 787,000 and Iraq added 134,500 to 3.164 million, according to secondary sources cited by the report. That more than compensated for an estimated drop of 50,400 barrels a day in Saudi output to 9.605 million.
Saudi Arabia’s own communications to the group showed an increase of 107,100 barrels a day to 9.704 million in September, according to separate data in the report.
Price cuts announced last week by Saudi Arabia, matched by Iran yesterday, fueled speculation it may let oil fall rather than cut production and cede market share. OPEC members in West Africa are also showing signs of greater competition, said Julian Lee, an oil strategist at Bloomberg First Word in London. Nigerian sales of crude for November have been slower than usual after Angola moved more quickly to reduce prices, he said.
Saudi Pressure
Brent for November settlement slid to $88.11 a barrel on the London-based ICE Futures Europe exchange today, the lowest in almost four years. West Texas Intermediate, the U.S. benchmark, dropped as low as $83.33 a barrel on the New York Mercantile Exchange, the least since July 3, 2012.
OPEC’s September production increase contributed to the fall of more than 20 percent in both grades from their June peaks, said Saxo Bank’s Hansen. A drop of that size meets a common definition of a bear market. “Saudi Arabia is leaning back a bit to force better co-operation” from other members on production cuts, Thina Saltvedt, an analyst at Oslo-based Nordea Markets, said by phone. “The demand side is getting weaker and weaker. It doesn’t look good if OPEC isn’t willing to tighten things up.”
OPEC’s output in September was about 300,000 barrels a day higher than the daily average of 30.2 million the group expects is needed in the fourth quarter. Its 12 members will probably cut either their output or formal production target of 30 million barrels a day when they next meet on Nov. 27 in Vienna, said 11 of 20 analysts surveyed by Bloomberg News yesterday. Estimates ranged from a reduction of 500,000 to 1 million barrels a day.
The organization kept unchanged annual forecasts for global oil demand, and the amount of crude OPEC will need to provide, for this year and next.
“The recovery in gasoil consumption for industry and transportation use, along with emerging winter demand” will support the market in coming months, it said.
Wheat Set for Biggest Rally in Two Months on Smaller Inventories
Wheat futures headed for the biggest weekly gain in two months after the U.S. government unexpectedly cut its outlook for world stockpiles.
Inventories before the 2015 harvest will reach 192.59 million metric tons, 1.9 percent lower than last month’s projection of 196.38 million, the U.S. Department of Agriculture said. Analysts surveyed by Bloomberg forecast an increase to 196.49 million. The agency also cut its estimate for domestic stockpiles.
Reserves are still projected to climb 3.8 percent from a year earlier. Futures tumbled 17 percent last quarter, the most in three years, on the outlook for bigger global supplies. World food prices fell for a sixth month in September, the longest slide since 2009, as the cost of dairy goods, grains, cooking oils and sugar declined amid prospects for rising production.
“The big surprises this month were the cuts in U.S. and world carryover estimates,” Dale Durchholz, a senior market analyst for AgriVisor LLC in Bloomington, Illinois, said in a telephone interview. “The USDA is forecasting stronger demand than almost anyone was expecting. That may help to focus end users on increasing purchases for long-term needs, to lock in current low prices.” Wheat futures for December delivery climbed 1.1 percent to $4.9875 a bushel at 11:56 a.m. on the Chicago Board of Trade. The grain is up 2.7 percent this week, the most since Aug. 8.
The USDA raised its outlook for world consumption by 0.6 percent to 714.11 million tons. Global use of the grain in livestock feed will climb 7.7 percent from a year earlier to 140.31 million tons, the agency said, raising its projection by 1.9 percent from September.
Tyson Costs
Futures fell 19 percent this year through yesterday. Lower grain prices are cutting costs for buyers including Tyson Foods Inc. (TSN) The USDA has forecast that grower incomes will drop to a four-year low, threatening to slow demand for farm machinery from makers including Deere & Co. (DE)
An index of 55 food items dropped 2.6 percent in September from August to 191.5, the lowest since 2010, the United Nation’s Food & Agriculture Organization said yesterday. “This year’s big crops, not just in North America but across agricultural production areas worldwide, will enhance food security after several years of weather disruptions,” David MacLennan, Cargill Inc.’s president and chief executive officer, said in a statement this week.
Copper Falls to One-Week Low as Economies Signal Sagging Demand
Copper fell to a one-week low in London as economic signals in Europe and China indicated metal demand will ebb.
There are signs the euro area’s recovery is losing momentum, European Central Bank President Mario Draghi said yesterday. In August, exports from Germany slumped the most since 2009, data showed yesterday. China’s main government-backed research group forecast a 7 percent expansion next year, down from a projected 7.3 percent growth in 2014, a report said. “Ongoing concerns about the global economic outlook are going to be a drag on the industrial metals like copper,” David Meger, the director of metal trading at Vision Financial Markets in Chicago, said in a telephone interview.
Copper for delivery in three months declined 0.9 percent to settle at $6,645 a metric ton ($3.01 a pound) on the London Metal Exchange. Earlier, the price touched $6,613, the lowest since Oct. 2.
The metal capped its first weekly gain since Aug. 22 after Federal Reserve policy makers said that U.S. growth “might be slower than they expected if foreign economic growth came in weaker than anticipated,” stoking speculation that the central bank won’t raise interest rates anytime soon. China is the world’s largest consumer, followed by the U.S. and Germany, which has largest economy in the euro area.
Aluminum, nickel, zinc and lead fell in London, while tin was unchanged. In New York, copper futures for December delivery gained 0.2 percent to close at $3.035 a pound at 1:14 p.m. on the Comex.
source: Bloomberg
The world’s two most-traded crude futures are collapsing because demand growth is slowing at a time when output is expanding from countries including the U.S. and Russia, the largest suppliers outside OPEC. The Organization of Petroleum Exporting Countries increased oil production by the most in almost three years last month as Libyan output surged.
“The market is catching its breath after a week of collapse,” Mike Wittner, the head of oil market research at Societe Generale SA (GLE) in New York and the third-most accurate forecaster for WTI among analysts ranked by Bloomberg in the past eight quarters, said by phone. “The fundamentals are weak but don’t justify this. It’s concern about OPEC that’s got the market rattled.”
WTI for November delivery rose 43 cents, or 0.5 percent, to $86.20 a barrel at 1:59 p.m. on the New York Mercantile Exchange. The contract touched $83.59, the lowest level since July 3, 2012. The volume of all futures traded was 54 percent above the 100-day average for this time of day.
Brent Slips
Brent for November settlement gained 25 cents, or 0.3 percent, to $90.30 a barrel on the London-based ICE Futures Europe exchange. The contract reached $88.11, the lowest since December 2010. Volume was 37 percent higher than the 100-day average. The European crude traded at a $4.10 premium to WTI on ICE, up from $2.57 on Oct. 3.
The 14-day relative strength index for Brent was 20.5606 today and has been below 30 since Sept. 30, according to data compiled by Bloomberg. The 14-day RSI for WTI slipped to 29.2592. An RSI below 30 typically signals a market is oversold.
“These markets are tremendously oversold,” Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston, said by phone. “Even in the most bearish markets there’s an occasional bounce, while bullish markets retreat at some point. A pause doesn’t mean we can’t drop to $80 next week, or for that matter rebound.”
Higher Output
OPEC increased output by 402,000 barrels a day in September to 30.47 million, the group said in its monthly oil market report today. It was the biggest monthly gain since November 2011 and the largest production in more than a year. The organization predicted demand will accelerate in the next few months.
“The market’s very weak because there’s considerable oversupply,” Amrita Sen, chief oil market analyst at consultants Energy Aspects Ltd. in London, said by phone. “There’s no sign from OPEC that they’re cutting back.” Saudi Arabia and Iran, both OPEC members, are discounting their main crude export grades to Asian buyers by the most in almost six years, prompting speculation that some OPEC nations are competing for market share.
State-run National Iranian Oil Co. cut official selling prices of its crude to buyers in Asia for November, two people with knowledge of the pricing decision said yesterday. The decrease came a week after Saudi Arabia, the world’s largest oil exporter, reduced the price of Arab Light crude for Asia to the lowest since December 2008.
Market Share
“The potential that the Saudi-Iranian cuts will spiral into a full-scale fight for market share are a major worry,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. “We’ll have to see if Iraq follows with an OSP cut as well.”
U.S. oil output increased to 8.88 million barrels a day last week, the most since March 1986, according to the Energy Information Administration. Crude inventories in the world’s biggest oil consumer gained by 5.02 million barrels to 361.7 million in the week ended Oct. 3, the EIA, the Energy Department’s statistical arm, said on Oct. 8.
Russia increased output 0.7 percent to 10.61 million barrels a day last month, according to preliminary data from CDU-TEK, which is part of the Energy Ministry. The figure is within 0.3 percent of the post-Soviet record in January and is for crude and condensates.
IMF Forecast
The International Monetary Fund said on Oct. 7 that the global economy will expand by 3.8 percent in 2015, down from a July projection of 4 percent. The International Energy Agency in Paris lowered its oil-demand forecasts for this year and next in its monthly report on Sept. 11.
“There’s a little drama fatigue in the market,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “We’re going to probably trade around the bottom here for a bit.” November gasoline futures decreased 1.37 cents, or 0.6 percent, to $2.2612 a gallon on the Nymex. It reached $2.2267, the lowest since Dec. 1, 2010. Pump prices fell 1.4 cents to $3.24 a gallon nationwide yesterday, the least expensive since December, according to AAA, the largest U.S. motoring group.
Ultra low sulfur diesel for November delivery rose 2.99 cents, or 1.2 percent, to $2.5665 a gallon. It touched $2.5035 earlier, the lowest intraday price since Jan. 10, 2011.
OPEC’s Biggest Supply Boost Since ’11 Spurs Bear Market
OPEC increased oil production by the most in almost three years, helping to drive prices toward a bear market. Iran and Saudi Arabia offered their oil at the deepest discounts since 2008, adding to speculation that members of the group are competing for market share.
The Organization of Petroleum Exporting Countries, which supplies 40 percent of the world’s oil, increased output by 402,000 barrels a day in September to 30.47 million, the group’s Vienna-based secretariat said in a monthly report. Iran matched Saudi Arabia yesterday by cutting the price of its main export grade to Asia by $1 a barrel, according to two people with knowledge of the pricing decision.
Brent futures, the international benchmark, traded at a four-year low today. Saudi Arabia told OPEC it raised output 11 percent last month, adding to speculation it will seek to preserve its share of export markets. Crude production is mounting in the U.S., Russia and Libya, while the pace of demand growth is lower as the economy slows in China, the world’s second-largest oil consumer.
“It’s a fight for market share out there at the moment,” Ole Sloth Hansen, an analyst at Saxo Bank A/S, said by e-mail today. “OPEC will have to come up with something otherwise the market will view it as a free invitation to carry on selling.”
Libyan Return
OPEC production last month climbed by the most since November 2011 and was the highest in more than a year, the group’s data show. Libya bolstered supplies by 250,600 barrels a day to 787,000 and Iraq added 134,500 to 3.164 million, according to secondary sources cited by the report. That more than compensated for an estimated drop of 50,400 barrels a day in Saudi output to 9.605 million.
Saudi Arabia’s own communications to the group showed an increase of 107,100 barrels a day to 9.704 million in September, according to separate data in the report.
Price cuts announced last week by Saudi Arabia, matched by Iran yesterday, fueled speculation it may let oil fall rather than cut production and cede market share. OPEC members in West Africa are also showing signs of greater competition, said Julian Lee, an oil strategist at Bloomberg First Word in London. Nigerian sales of crude for November have been slower than usual after Angola moved more quickly to reduce prices, he said.
Saudi Pressure
Brent for November settlement slid to $88.11 a barrel on the London-based ICE Futures Europe exchange today, the lowest in almost four years. West Texas Intermediate, the U.S. benchmark, dropped as low as $83.33 a barrel on the New York Mercantile Exchange, the least since July 3, 2012.
OPEC’s September production increase contributed to the fall of more than 20 percent in both grades from their June peaks, said Saxo Bank’s Hansen. A drop of that size meets a common definition of a bear market. “Saudi Arabia is leaning back a bit to force better co-operation” from other members on production cuts, Thina Saltvedt, an analyst at Oslo-based Nordea Markets, said by phone. “The demand side is getting weaker and weaker. It doesn’t look good if OPEC isn’t willing to tighten things up.”
OPEC’s output in September was about 300,000 barrels a day higher than the daily average of 30.2 million the group expects is needed in the fourth quarter. Its 12 members will probably cut either their output or formal production target of 30 million barrels a day when they next meet on Nov. 27 in Vienna, said 11 of 20 analysts surveyed by Bloomberg News yesterday. Estimates ranged from a reduction of 500,000 to 1 million barrels a day.
The organization kept unchanged annual forecasts for global oil demand, and the amount of crude OPEC will need to provide, for this year and next.
“The recovery in gasoil consumption for industry and transportation use, along with emerging winter demand” will support the market in coming months, it said.
Wheat Set for Biggest Rally in Two Months on Smaller Inventories
Wheat futures headed for the biggest weekly gain in two months after the U.S. government unexpectedly cut its outlook for world stockpiles.
Inventories before the 2015 harvest will reach 192.59 million metric tons, 1.9 percent lower than last month’s projection of 196.38 million, the U.S. Department of Agriculture said. Analysts surveyed by Bloomberg forecast an increase to 196.49 million. The agency also cut its estimate for domestic stockpiles.
Reserves are still projected to climb 3.8 percent from a year earlier. Futures tumbled 17 percent last quarter, the most in three years, on the outlook for bigger global supplies. World food prices fell for a sixth month in September, the longest slide since 2009, as the cost of dairy goods, grains, cooking oils and sugar declined amid prospects for rising production.
“The big surprises this month were the cuts in U.S. and world carryover estimates,” Dale Durchholz, a senior market analyst for AgriVisor LLC in Bloomington, Illinois, said in a telephone interview. “The USDA is forecasting stronger demand than almost anyone was expecting. That may help to focus end users on increasing purchases for long-term needs, to lock in current low prices.” Wheat futures for December delivery climbed 1.1 percent to $4.9875 a bushel at 11:56 a.m. on the Chicago Board of Trade. The grain is up 2.7 percent this week, the most since Aug. 8.
The USDA raised its outlook for world consumption by 0.6 percent to 714.11 million tons. Global use of the grain in livestock feed will climb 7.7 percent from a year earlier to 140.31 million tons, the agency said, raising its projection by 1.9 percent from September.
Tyson Costs
Futures fell 19 percent this year through yesterday. Lower grain prices are cutting costs for buyers including Tyson Foods Inc. (TSN) The USDA has forecast that grower incomes will drop to a four-year low, threatening to slow demand for farm machinery from makers including Deere & Co. (DE)
An index of 55 food items dropped 2.6 percent in September from August to 191.5, the lowest since 2010, the United Nation’s Food & Agriculture Organization said yesterday. “This year’s big crops, not just in North America but across agricultural production areas worldwide, will enhance food security after several years of weather disruptions,” David MacLennan, Cargill Inc.’s president and chief executive officer, said in a statement this week.
Copper Falls to One-Week Low as Economies Signal Sagging Demand
Copper fell to a one-week low in London as economic signals in Europe and China indicated metal demand will ebb.
There are signs the euro area’s recovery is losing momentum, European Central Bank President Mario Draghi said yesterday. In August, exports from Germany slumped the most since 2009, data showed yesterday. China’s main government-backed research group forecast a 7 percent expansion next year, down from a projected 7.3 percent growth in 2014, a report said. “Ongoing concerns about the global economic outlook are going to be a drag on the industrial metals like copper,” David Meger, the director of metal trading at Vision Financial Markets in Chicago, said in a telephone interview.
Copper for delivery in three months declined 0.9 percent to settle at $6,645 a metric ton ($3.01 a pound) on the London Metal Exchange. Earlier, the price touched $6,613, the lowest since Oct. 2.
The metal capped its first weekly gain since Aug. 22 after Federal Reserve policy makers said that U.S. growth “might be slower than they expected if foreign economic growth came in weaker than anticipated,” stoking speculation that the central bank won’t raise interest rates anytime soon. China is the world’s largest consumer, followed by the U.S. and Germany, which has largest economy in the euro area.
Aluminum, nickel, zinc and lead fell in London, while tin was unchanged. In New York, copper futures for December delivery gained 0.2 percent to close at $3.035 a pound at 1:14 p.m. on the Comex.
source: Bloomberg