Oil eked out a gain with Washington planning on buying 1 million barrels of crude for the national stockpile, but held near a five-month low on expectations of a looming global surplus.
West Texas Intermediate traded in a more than $1 range before settling near $58 a barrel. Although the US plan to refill the Strategic Petroleum Reserve supported prices, it wasn’t enough to shift sentiment in a market that has declined by more than 10% since late September. WTI futures are on course for a third monthly loss.
The amount of crude on tankers at sea has risen to a record high, signaling that a long-anticipated surplus may have started to materialize, while time spreads are starting to signal ample supply. The International Energy Agency expects world oil inventories to exceed demand by almost 4 million barrels a day next year as OPEC+ and some countries outside the alliance ramp up output, likely in a bid to recapture market share.
“We’ve got supply growth running three times faster than demand growth,” Bob McNally, founder and president of Rapidan Energy Group, said in an interview on Bloomberg Television. “Near-term we have a glut.”
Commodity trading advisers, meanwhile, could potentially reach a maximum-short position in the next few sessions, helping send prices lower, according to data from Bridgeton Research Group. The robot traders are currently 91% short in both Brent and WTI, and could accelerate if futures fall by roughly 1%, the firm added.
Traders are also keeping an eye on relations between the US and China, the world’s top producer and consumer of oil. US President Donald Trump again signaled that an expected meeting with counterpart Xi Jinping in South Korea next week might not materialize.
The US benchmark crude future’s November expiry on Tuesday also contributed to choppy trading.
Oil Prices
WTI for November delivery, which expires on Tuesday, gained 0.5% to settle at $57.82 a barrel in New York.
The more-active December contract settled at $57.24 a barrel.
Brent for December settlement edged up 0.5% to settle at $61.32 a barrel.
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