West Texas Intermediate crude held gains above $80 a barrel as Goldman Sachs Group Inc. said the market isn’t oversupplied. Brent was steady in London.
Futures fluctuated in New York after rebounding 1.1 percent yesterday.
Prices are headed for a third weekly loss, having slid into a bear market amid speculation that Saudi Arabia and other members of the Organization of Petroleum Exporting Countries will hold off from supply cuts.
The decline is “too much, too early” because a glut is yet to materialize, according to Goldman Sachs. Oil is paring its collapse as banks including BNP Paribas SA and Bank of America Corp. predict the rout may be over.
They’re counting on OPEC reducing output as the U.S. pumps the most oil in almost 30 years and world demand growth slows. Saudi Arabia and Kuwait indicated the price fall doesn’t warrant immediate production cuts, bolstering concern the drop may have further to run.
“Prices have likely overshot to the downside, particularly as the lower we go the tighter the near-term balances become,” Jeffrey Currie, Goldman’s head of commodities research in New York, said in a report e-mailed today.
“This leaves us near-term constructive despite being long-term bearish.”
Bear Market
WTI for November delivery was at $82.68 a barrel in electronic trading on the New York Mercantile Exchange, down 2 cents, at 2:39 p.m. Singapore time. The contract climbed 92 cents to $82.70 yesterday, the first gain in four days.
Prices are down 3.7 percent this week and 16 percent lower in 2014. Brent for December settlement was 11 cents lower at $85.71 a barrel on the London-based ICE Futures Europe exchange. The November contract expired yesterday after advancing 69 cents to $84.47.
The European benchmark crude traded at a premium of $3.85 to WTI for December, compared with a front-month spread of $4.39 at the end of last week.
While speculation of a global oversupply drove down prompt oil prices, there is no incentive to store oil because forward contracts are weaker. That may create a near-term shortage as stockpiles are depleted, according to the bank.
“The recent sell-off in oil has been mostly driven by positioning based upon expected fundamental shifts, as opposed to currently observable shifts,” Goldman said.
Oil Stockpiles
WTI’s 14-day relative strength index is at about 27 today, rising from as low as 21.9 during the week. A reading of less than 30 typically signals that a market has fallen too quickly.
Crude inventories in the U.S., the world’s biggest oil consumer, expanded by 8.92 million barrels to 370.6 million in the week ended Oct. 10, the Energy Information Administration reported yesterday. That’s the highest level since July.
A median 2.45 million gain was forecast in a Bloomberg News survey of 10 analysts. Production accelerated for a second week to 8.95 million barrels a day, the most since June 1985, according to the EIA, the Energy Department’s statistical arm.
“The market is still waiting for balances to be adjusted from the supply side,” Miswin Mahesh, a commodities analyst at Barclays Plc, said in a Bloomberg television interview in Singapore. “There’s a bit more downside to come before we see the floor.”
Global oil demand will climb by 650,000 barrels a day this year, the slowest growth since 2009, the Paris-based International Energy Agency said in its monthly report on Oct. 14.That’s a reduction of 250,000 from the prior projection.
OPEC, which supplies about 40 percent of the world’s oil, is boosting production even as demand growth falters.
The 12-member group pumped 30.47 million barrels a day in September, the most since August 2013, according to its monthly report on Oct. 10. The group is scheduled to gather on Nov. 27 in Vienna.
bloomberg.com
Prices are headed for a third weekly loss, having slid into a bear market amid speculation that Saudi Arabia and other members of the Organization of Petroleum Exporting Countries will hold off from supply cuts.
The decline is “too much, too early” because a glut is yet to materialize, according to Goldman Sachs. Oil is paring its collapse as banks including BNP Paribas SA and Bank of America Corp. predict the rout may be over.
They’re counting on OPEC reducing output as the U.S. pumps the most oil in almost 30 years and world demand growth slows. Saudi Arabia and Kuwait indicated the price fall doesn’t warrant immediate production cuts, bolstering concern the drop may have further to run.
“Prices have likely overshot to the downside, particularly as the lower we go the tighter the near-term balances become,” Jeffrey Currie, Goldman’s head of commodities research in New York, said in a report e-mailed today.
“This leaves us near-term constructive despite being long-term bearish.”
Bear Market
WTI for November delivery was at $82.68 a barrel in electronic trading on the New York Mercantile Exchange, down 2 cents, at 2:39 p.m. Singapore time. The contract climbed 92 cents to $82.70 yesterday, the first gain in four days.
Prices are down 3.7 percent this week and 16 percent lower in 2014. Brent for December settlement was 11 cents lower at $85.71 a barrel on the London-based ICE Futures Europe exchange. The November contract expired yesterday after advancing 69 cents to $84.47.
The European benchmark crude traded at a premium of $3.85 to WTI for December, compared with a front-month spread of $4.39 at the end of last week.
While speculation of a global oversupply drove down prompt oil prices, there is no incentive to store oil because forward contracts are weaker. That may create a near-term shortage as stockpiles are depleted, according to the bank.
“The recent sell-off in oil has been mostly driven by positioning based upon expected fundamental shifts, as opposed to currently observable shifts,” Goldman said.
Oil Stockpiles
WTI’s 14-day relative strength index is at about 27 today, rising from as low as 21.9 during the week. A reading of less than 30 typically signals that a market has fallen too quickly.
Crude inventories in the U.S., the world’s biggest oil consumer, expanded by 8.92 million barrels to 370.6 million in the week ended Oct. 10, the Energy Information Administration reported yesterday. That’s the highest level since July.
A median 2.45 million gain was forecast in a Bloomberg News survey of 10 analysts. Production accelerated for a second week to 8.95 million barrels a day, the most since June 1985, according to the EIA, the Energy Department’s statistical arm.
“The market is still waiting for balances to be adjusted from the supply side,” Miswin Mahesh, a commodities analyst at Barclays Plc, said in a Bloomberg television interview in Singapore. “There’s a bit more downside to come before we see the floor.”
Global oil demand will climb by 650,000 barrels a day this year, the slowest growth since 2009, the Paris-based International Energy Agency said in its monthly report on Oct. 14.That’s a reduction of 250,000 from the prior projection.
OPEC, which supplies about 40 percent of the world’s oil, is boosting production even as demand growth falters.
The 12-member group pumped 30.47 million barrels a day in September, the most since August 2013, according to its monthly report on Oct. 10. The group is scheduled to gather on Nov. 27 in Vienna.
bloomberg.com
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