Oil futures weighed down by surging inventory, slow demand
By Scott DiSavino
NEW YORK, Nov 4 (Reuters) – Oil futures on Friday fell by their biggest weekly percentage decline since January of around 9 per cent as signs of tensions resurfaced between Saudi Arabia and Iran that could scupper a key supply cut pact.
Traders also noted a surge in U.S. crude inventories last week and muted demand continued to weigh on futures.
Old disputes between Saudi Arabia and rival Iran resurfaced at a meeting of OPEC experts last week, with Riyadh saying it could raise oil output steeply to bring prices down if Tehran refuses to limit its supply, sources from the Organization of the Petroleum Exporting Countries (OPEC) told Reuters.
The meeting was intended to work out the details of cuts ahead of the next OPEC meeting on Nov. 30 following a decision to reduce output in Algiers to 32.50-33.0 million barrels per day in order to boost prices.
“Oil prices have been down all week because we’re seeing some of the OPEC countries’ negotiating stances, half of which are in the public. That is lowering people’s expectations of a future agreement to cut or cap production,” said James Williams, president of energy consultant WTRG Economics in Arkansas.
Both benchmarks settled at their lowest levels since September with Brent down 77 cents, or 1.7 per cent, at $45.58 a barrel, and U.S. crude down 59 cents, or 1.3 per cent, at $44.07. That put both contracts down 15 per cent since their early October highs.
Both futures fell for a sixth day in a row, the longest such streak for U.S. crude since July and Brent since June.
For the week, U.S. crude was down about 9 per cent and Brent down about 8 per cent, the biggest weekly losses for both since January.
Analysts said markets were also weighed down by traders pulling out money from futures ahead of the U.S. presidential election on Tuesday, which is seen as a risk to markets.
Beyond election concerns, traders said fundamentals were weak, with U.S. crude stocks surging, demand growth low, and doubts that OPEC and Russia can agree on a meaningful output cut this month.
U.S. drillers added oil rigs this week for a 20th week in the last 23, energy services company Baker Hughes said.
Analysts said the rig increase occurred as energy firms followed through on plans to add rigs made months ago when crude was still trading over the key $50 a barrel level that was expected to prompt drillers to return to the well pad.
Colonial Pipeline delayed the restart of its main gasoline line, which was disrupted this week by an explosion, a day to Sunday.
(Reporting by Julia Payne in London; Editing by Marguerita Choy and David Evans)