Crude was poised to end its fourth month below $50 a barrel amid a global glut that’s showing no signs of relief for oil and gas companies that posted more than $19 billion in write-downs in a single week.
Futures slid as much as 1 percent in New York. Output from Iraq, the second-biggest OPEC producer, exceeds 4 million barrels a day, Oil Minister Adel Abdul Mahdi said, according to Almada news website. U.S. crude stockpiles rose for a fifth week through Oct. 23, keeping supplies more than 100 million barrels above the five-year seasonal average, government data showed Wednesday.
Oil failed to sustain a gain above $50 a barrel earlier this month as the Organization of Petroleum Exporting Countries pumps above its quota and the International Energy Agency estimates the surplus will remain until at least the middle of 2016. Royal Dutch Shell Plc announced its worst loss in 16 years on Thursday, including $8.2 billion in impairments.
“The rise in U.S. crude stockpiles presents headwinds and that seems to be the bigger story,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “It would take a move up beyond $50.90 to suggest we are in for some sort of larger corrective movement for oil.”
Oil Writedowns
West Texas Intermediate for December delivery fell as much as 46 cents to $45.60 a barrel on the New York Mercantile Exchange and was at $45.64 at 7:59 a.m. London time. The contract gained 12 cents to $46.06 on Thursday. Prices are up 2.3 percent this week and 1.2 percent higher for the month.
Brent for December settlement lost 37 cents to $48.43 a barrel on the London-based ICE Futures Europe exchange. It dropped 25 cents to $48.80 on Thursday. The European benchmark crude traded at a premium of $2.80 to WTI.
Barclays Plc predicted $20 billion of impairments for Southwestern Energy Co., Apache Corp., Chesapeake Energy Corp., Devon Energy Corp., Encana Corp. and Newfield Exploration Co. Southwestern’s $2.8 billion charge, announced Oct. 22, was double the Barclays forecast. The other five companies are scheduled to report third-quarter results next week.
Iran may roil global oil markets with plans to sell about 45 million barrels of fuel stored in tankers in the Persian Gulf within three months of the removal of sanctions on its economy, according to analysts. The OPEC producer is seeking to claw back the market share it lost under sanctions by boosting exports after a July deal with world powers to return to energy and financial markets.
source: Bloomberg
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