Tags: oil | pipeline | price | OPEC

Oil Falls to One-Month Low, Shrugging Off Fuel Pipeline Blast

Oil Falls to One-Month Low, Shrugging Off Fuel Pipeline Blast


Tuesday, 01 November 2016 03:20 PM

Oil fell to a one-month low as concerns about rising U.S. crude stockpiles outweighed the impact of a pipeline explosion that sent gasoline surging.

Crude fluctuated in New York after slumping 3.8 percent Monday. Futures climbed as much as 1.1 percent after the blast and resulting blaze shut the mainlines of Colonial Pipeline Co., which carries oil products to New York Harbor from the U.S. refining center in Houston. Prices retreated in early trading as a projected U.S. stockpile gain added to concern that OPEC will struggle to decisively tackle a global crude surplus.

Oil has dropped about 5 percent since the Organization of Petroleum Exporting Countries failed Friday to agree on country quotas as part of implementing it’s output-cut accord. The chance of OPEC reaching a deal at the Nov. 30 summit is low due to internal discord, according to Goldman Sachs Group Inc. This isn’t the view of Francisco Blanch, Bank of America Merrill Lynch’s head of commodity research, who said on Bloomberg television that he expects an accord.

"Crude oil isn’t getting much sympathy buying, which speaks to bearish sentiment," said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. "The focus has been on the breakdown of OPEC, non-OPEC talks. The fact that we aren’t rallying speaks volumes to how the global supply glut is weighing on the market."

West Texas Intermediate for December delivery fell 2 cents to $46.84 a barrel at 12:02 p.m. on the New York Mercantile Exchange. Futures touched $46.30 earlier, the lowest since Sept. 28. Prices lost 2.9 percent in October, the first monthly decline since July. Total volume traded was 42 percent above the 100-day average.

U.S. Stockpiles

December gasoline futures surged 10.48 cents, or 7.4 percent, to $1.5243 a gallon after climbing as much as 15 percent in early trading. Diesel for December delivery advanced 3.23 cents, or 2.2 percent, to $152.78.

Brent for January settlement rose 10 cents to $48.71 a barrel on the London-based ICE Futures Europe exchange. The December contract expired Monday after falling 2.8 percent to $48.30. The global benchmark was at a $1.17 premium to January WTI.

U.S. crude inventories rose by 2 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Supplies, which have dropped in seven of the past eight weekly reports, remain at the highest seasonal level in more than three decades, according to weekly government data compiled since 1982.

"Prices rallied in September and October on a lot of OPEC talk and North American stockpile draws," said Tim Pickering, founder and chief investment officer of Auspice Capital Advisors Ltd. in Calgary. "We’ve had a modest pullback, which is healthy. We need to get through the election next week before the market makes its next move."

Democrat Hillary Clinton faces Republican Donald Trump in the U.S. presidential election on Nov. 8.

It was the second time in two months that Colonial was forced to shut its lines. A spill on Sept. 9 knocked them offline for 12 days, cutting supplies to 50 million Americans in the Southeast. Alabama Governor Robert Bentley said the incident in Shelby County Monday was about a mile (1.6 kilometers) west of the September spill.

"The explosion and closure of the Colonial is a disaster," said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. "Refineries north of the disruption need to ramp up utilization to produce more gasoline. This will increase crude demand on the East Coast while depressing it on the Gulf Coast."

© Copyright 2018 Bloomberg News. All rights reserved.

1Like our page
Oil fell to a one-month low as concerns about rising U.S. crude stockpiles outweighed the impact of a pipeline explosion that sent gasoline surging.
oil, pipeline, price, OPEC
Tuesday, 01 November 2016 03:20 PM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved