Oil fell to a one-week low after industry data showed a build in U.S. crude inventories.
Futures dropped 0.5 percent in New York after closing 3 percent lower on Tuesday. U.S. stockpiles increased by 1.44 million barrels last week, the industry-funded American Petroleum Institute was said to report, while Energy Information Administration data Wednesday is forecast to show supplies rose by 4 million barrels. Libya could double output in four weeks after the state oil company made a deal with military forces who took control of export facilities.
Oil has fluctuated since rallying in August amid speculation the Organization of Petroleum Exporting Countries and Russia would agree on measures to stabilize the market at a meeting later this month. Record output from OPEC’s Gulf members is compounding the global glut which will last into next year, the International Energy Agency said Tuesday. The agency last month predicted the market would return to equilibrium this year.
“The statistics from the EIA will be the most important event of the day,” Tamas Varga, an analyst at PVM Oil Associates Ltd., said by phone. While the API build was lower than expected and initially boosted prices Wednesday, EIA figures could move prices lower if they show a larger stockpile increase, he said.
West Texas Intermediate for October delivery was 23 cents lower at $44.57 a barrel on the New York Mercantile Exchange at 1:32 p.m. London time. The contract slid $1.39 to close at $44.90 Tuesday. Total volume traded was 4 percent below the 100-day average.
Brent for November settlement was at $46.83 a barrel on the London-based ICE Futures Europe exchange, down 27 cents. The contract fell $1.22 to $47.10 on Tuesday, the lowest close since Sept. 2. The global benchmark was at a $1.61 premium to WTI for November.
U.S. gasoline stockpiles fell by 2.39 million barrels last week, the API said Tuesday, according to people familiar with the data. Cushing, Oklahoma crude stocks fell by 1.12 million barrels, they said. Nationwide crude stockpiles remain more than 100 million barrels above the five-year average, government data show.
Libya’s National Oil Co. plans to restart oil exports from two key ports after reaching a deal with Khalifa Haftar, commander of the military forces who took control of the facilities on Sunday. The resumption of shipments from Ras Lanuf and Es Sider could allow Libya to double crude output to 600,000 barrels a day within four weeks, NOC Chairman Mustafa Sanalla said Tuesday in a statement on the company’s website.
“It’s one thing to say that exports will resume, it’s a different thing for all the stakeholders to agree on the actual resumption,” said Riccardo Fabiani, senior North Africa analyst at Eurasia Group. “I am skeptical this will happen.”
The move is the latest in a series of initiatives to reopen the ports that in December 2014 were placed under force majeure, a legal term allowing producers to walk away from contractual commitments. The state-run company lifted the force majeure on the port of Zueitina Wednesday, the head of the oil workers union in the Libyan port said by phone.