NEW YORK (Reuters) – Oil prices fell about 3 percent on Wednesday, hitting August lows, on worries U.S. crude inventories were piling up and Iraq was bringing on more supply that would intensify OPEC’s fight for market share.
U.S. crude stockpiles jumped 6.3 million barrels last week for a seventh week of builds, industry group American Petroleum Institute said on Tuesday, far surpassing the 1 million-barrels forecast by analysts in a Reuters poll. The U.S. Energy Information Administration (EIA) issues official inventory data on Thursday.
Separately, Reuters shipping data showed tankers with nearly 20 million barrels of Iraqi oil due to sail to the United States in November, almost 40 percent above the amount booked to arrive in October. That would be the largest U.S. monthly import of Iraqi oil since mid-2012.
Iraq is OPEC’s No. 2 crude producer.
In another sign of oversupply, a traffic jam of about 40 oil tankers has emerged along the U.S. Texas coast.
“You can talk all you want about oil demand being better next year and beyond, but right now we have a heck of a glut on our hands that I think has to be priced in some more,” said John Kilduff, partner at New York energy hedge fund Again Capital.
Brent crude <LCOc1> settled down $1.63, or 3.4 percent, at $45.81 a barrel. Its session low of $45.62 was the lowest since Aug. 27.
U.S. crude’s benchmark West Texas Intermediate (WTI) contract <CLc1> settled down $1.28, or 3 percent, at $42.93.
WTI’s fundamentals have been somewhat superior to Brent’s in recent months due to easing U.S. shale oil output. But analysts said that advantage could fade as shale production shows new vigor.
“With U.S. commercial crude cover likely to see new 80-year highs by month’s end amidst some indications that the rate of production decline is slowing, our long held view that WTI will be re-visiting the late August lows of $37.75 has been reinforced,” wrote Jim Ritterbusch of Chicago oil consultancy Ritterbusch & Associates.
Traders were also worried because the world’s largest oil producers, Saudi Arabia and Russia, were still pumping around record levels to maintain market share.
OPEC member Ecuador said at an Arab-South American summit in Riyadh that the only way to balance the market was to cut production and it aimed to reach an agreement on that at the producer group’s December meeting.
(Additional reporting by Sarah McFarlane and Simon Falush in London and Henning Gloystein in Singapore; Editing by Phil Berlowitz, Marguerita Choy and David Gregorio)