January 30, 2018, by Alex Longley
Oil’s slowing down as danger signs flash ahead.
Futures fell for a second day as U.S. crude stockpiles were seen expanding for the first time in 11 weeks, ending a record run of declines. A sharp contraction in Brent’s premium to West Texas Intermediate may lead to further inventory gains as U.S. exports grow less economical.
While U.S. oil has risen more than 7 percent this year as OPEC trims supply to reduce a glut, speculation is increasing that the rally may encourage growth in American output, which is already at the highest level in more than three decades. The nation’s crude inventories probably rose by 800,000 barrels last week, according to a Bloomberg survey before government data Wednesday.
“You have a correction, but we need to see how long it will continue,” said Olivier Jakob, managing director of Petromatrix GmbH in Zug, Switzerland. “There is the narrowing of the WTI-Brent spread, which is bearish for WTI. The U.S. needs to export crude otherwise it will translate into oil moving back into stocks.”
WTI for March delivery lost 59 cents, or 0.9 percent, to $64.97 a barrel on the New York Mercantile Exchange at 11:48 a.m. London time, after falling 58 cents on Monday. Total volume traded was about 43 percent above the 100-day average.
See also: Can Oil Stay Above $70? Eni’s Chief Doesn’t Think So
Brent for March settlement dropped 36 cents to $69.10 a barrel on the London-based ICE Futures Europe exchange, after sliding $1.06 on Monday. The global benchmark crude traded at a premium of $4.13 to WTI, after reaching the smallest premium since August on Monday.
U.S. stockpiles fell to 411.6 million barrels in the week ended Jan. 19, the lowest level since February 2015. Nationwide oil production climbed to 9.88 million barrels a day in the period, the highest in weekly government data since 1983.
Other oil news:
BP returned to the peak-oil debate Tuesday, saying some companies’ assets will be left undrilled. “We’re facing competition from alternative sources of energy like we’ve never had before,” upstream head Bernard Looney said. Exxon Mobil Corp. is set to invest $50 billion over the next half-decade in a program that includes the Permian Basin of West Texas and New Mexico. Russia’s top oil driller, Eurasia Drilling Co., reports an 18 percent increase in wells in 2017.