NEW YORK: Crude oil in New York declined, widening its discount to Brent crude, on speculation that the reversal of the Seaway pipeline won't be enough to eliminate a glut in the US Midwest.
Oil may fall this week, according to a Bloomberg News survey. Eighteen of 36 analysts, or 50%, forecast oil will drop through November 25. Eleven, or 31%, predicted a gain, and seven, or 19%, said there will be little change.
West Texas Intermediate oil fell more than Brent two days after Brent's premium sank to an eight-month low when Enbridge and Enterprise Products Partners said they will reverse the direction of the pipeline, sending crude from Cushing, Oklahoma, to the Gulf Coast. WTI is the New York benchmark.
"People realized that they overreacted when the Seaway pipeline news was announced," said Phil Flynn, an analyst with PFGBest in Chicago.
"One pipeline isn't enough to alleviate the glut and the reversal isn't necessarily a bullish event." Crude for December delivery dropped $1.41, or 1.4%, to settle at $97.41 a barrel on the New York Mercantile Exchange on the last trading day. For the week, crude fell $1.58, or 1.6%, the first decline in seven weeks.
The January contract, which traded at nine times the volume of December, fell $1.26 to $97.67.
Brent oil for January settlement fell 66 cents, or 0.6%, to $107.56 a barrel on the London-based ICE Futures Europe exchange. Brent's premium to WTI rose 60 cents to $9.89 a barrel. The spread, which reached a record of $27.88 on October 14, dropped to $9.28 from $13.02 on November 16 after Enbridge's announcement.
The reversal will add an outlet to transport oil from the central US and Canada to the coast of the Gulf of Mexico. "We might have overdone it and seen the spread come in too much," said Chris Barber, a senior analyst at Energy Security Analysis in Wakefield, Massachusetts.
economictimes.indiatimes.com
Oil may fall this week, according to a Bloomberg News survey. Eighteen of 36 analysts, or 50%, forecast oil will drop through November 25. Eleven, or 31%, predicted a gain, and seven, or 19%, said there will be little change.
West Texas Intermediate oil fell more than Brent two days after Brent's premium sank to an eight-month low when Enbridge and Enterprise Products Partners said they will reverse the direction of the pipeline, sending crude from Cushing, Oklahoma, to the Gulf Coast. WTI is the New York benchmark.
"People realized that they overreacted when the Seaway pipeline news was announced," said Phil Flynn, an analyst with PFGBest in Chicago.
"One pipeline isn't enough to alleviate the glut and the reversal isn't necessarily a bullish event." Crude for December delivery dropped $1.41, or 1.4%, to settle at $97.41 a barrel on the New York Mercantile Exchange on the last trading day. For the week, crude fell $1.58, or 1.6%, the first decline in seven weeks.
The January contract, which traded at nine times the volume of December, fell $1.26 to $97.67.
Brent oil for January settlement fell 66 cents, or 0.6%, to $107.56 a barrel on the London-based ICE Futures Europe exchange. Brent's premium to WTI rose 60 cents to $9.89 a barrel. The spread, which reached a record of $27.88 on October 14, dropped to $9.28 from $13.02 on November 16 after Enbridge's announcement.
The reversal will add an outlet to transport oil from the central US and Canada to the coast of the Gulf of Mexico. "We might have overdone it and seen the spread come in too much," said Chris Barber, a senior analyst at Energy Security Analysis in Wakefield, Massachusetts.
economictimes.indiatimes.com
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