Oil extends losses as higher US output outlook counters curbs

Prices still less than $1 lower for the week

A pump jack on an oilfield in Bashkortostan, Russia. Crude prices are lower. Sergei Karpukhin / Reuters

Oil extended declines for a third day amid speculation that a predicted gain in US output will offset Opec-led efforts to trim a global glut.

Futures lost 0.2 per cent in New York after falling 0.8 per cent in the previous two sessions, even as industry data showed US crude stockpiles slumped last week. The Energy Information Administration marginally boosted its estimates for American production in 2017 and 2018, changing its forecast this year to average 9.35 million barrels a day, up from 9.33 million.

While oil is down for a third day, prices are less than US$1 lower from Friday’s close as investors weigh rising global supply against output reductions from the Organization of Petroleum Exporting Countries and its allies. Opec said Iraq, the United Arab Emirates and Kazakhstan, which have lagged in their pledged curbs, affirmed their commitment to cuts at a meeting in Abu Dhabi.

“US shale continues to grow,” Dominic Schnider, the head of commodities and Asia-Pacific foreign exchange at UBS Group AG’s wealth-management unit in Hong Kong, said in a Bloomberg television interview. “Although we’re positive on oil, there is at some stage a cap to the oil price because supply will react.”

West Texas Intermediate for September delivery was at $49.05 a barrel on the New York Mercantile Exchange, down 12 cents, at 1:35 p.m. in Hong Kong. Total volume traded was about 31 per cent below the 100-day average. Prices lost 22 cents to $49.17 on Tuesday.

Brent for October settlement dropped 19 cents to $51.95 a barrel on the London-based ICE Futures Europe exchange. Prices Tuesday slid 23 cents, or 0.4 per cent, to $52.14 a barrel. The global benchmark crude traded at a premium of $2.74 to October WTI.

US crude output will average 9.91 million barrels a day next year, according to the EIA’s monthly Short-Term Energy Outlook released Tuesday. That’s up from a July estimate of 9.9 million barrels a day for 2018 and compares with an average 9.19 million year-to-date.

* Bloomberg