Oil Trades Lower on OPEC Forecast
LONDON – Oil prices edged lower Thursday after advancing nearly $3 in the previous session, as OPEC downgraded its consumption forecast and traders awaited the release of U.S. petroleum supply data later in the day.
The Organization of Petroleum Exporting Countries forecast that demand for oil in the current quarter would rise 1.97 percent, down from expectations of 2.1 percent a month ago.
“Late winter in North America along with the high price of transport fuels appears to be reducing regional oil consumption in the fourth quarter, leading to a downward revision of 0.1 million barrels a day for that quarter,” the group said in its monthly oil market report.
OPEC also said that while oil stocks in the world’s most advanced economies had fallen in September and were expected to fall in October and throughout the winter, they were not yet showing signs of “alarming” tightness.
Prices were supported by expectations that U.S. oil inventories fell last week, but many traders were waiting on the sidelines as “it’s too risky to sell crude before the data comes out,” said Koichi Murakami, a broker at Daiichi Shohin.
Adding uncertainty was word that a major pipeline feeding one of Royal Dutch Shell PLC’s two main oil export terminals in southern Nigeria was attacked and ruptured. Oil exports have suffered in the past two years because of attacks by armed groups in the Niger Delta.
Light, sweet crude for December delivery lost 7 cents to $94.02 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. The contract had risen $2.92 to settle at $94.09 a barrel Wednesday.
In London, December Brent crude futures fell 17 cents to $91.19 a barrel on the ICE Futures exchange.
Prices had risen Wednesday after OPEC Secretary-General Abdalla Salem el-Badri said there is no need for the OPEC to add more oil to the market, according to Dow Jones Newswires. Oil prices fell earlier this week in part due to comments from Saudi Arabia’s oil minister suggesting that the cartel will discuss raising production at a meeting next month.
Meanwhile, the U.S. dollar slipped on Wednesday, driving investors back to crude futures. Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the U.S. currency is falling.
The weekly inventory report from the U.S. Energy Information Administration is expected to show that crude oil supplies fell by 300,000 barrels, according to the average estimate of analysts polled by Dow Jones Newswires.
Gasoline inventories, on average, likely fell 100,000 barrels, while distillate stocks were expected to fall 300,000 barrels. Refinery use likely rose 0.7 percentage point to 86.9 percent of capacity.
Heating oil futures fell 0.62 cent to $2.5672 a gallon on the Nymex, while gasoline prices dropped 1.39 cents to $2.3565 a gallon. Natural gas futures advanced 3.4 cents to $7.801 per 1,000 cubic feet.
On Nov. 7, crude prices rose to an intraday record of $98.62 a barrel and appeared headed for $100, driven by a mixture of concerns about falling domestic supplies and rising demand.