Singapore: Oil fell for a third day on Thursday after Enbridge said US regulators have agreed to a Friday restart of the company’s biggest pipeline from Canada, restoring crude supplies to refiners in the Midwest.
US crude for October fell 68 cents to $75.34 a barrel at 0304 GMT, having dropped 1% on Wednesday. The contract hit a one-month high above $78 earlier this week on concern the Enbridge outage could last until October.
“It’s just unwinding from the expectation that it was going to be blocked for some time,” said Michelle Kwek, an analyst at Informa Global Markets in Singapore.
The US Pipeline and Hazardous Materials Safety Administration agreed to the Friday restart, an Enbridge spokeswoman said late on Wednesday, after repairs on the pipeline were completed following a leak that forced it to shut down nearly a week ago.
Drops last week in petroleum stockpiles held by the US, the world’s top oil consumer, did little to allay surplus concerns, although the drawdown may have continued this week because of the pipeline closure.
“Maybe stockpiles will be reduced by a little bit, but they will still have oversupply,” Kwek said.
US crude oil inventories dropped last week by 2.49 million barrels to 357.37 million barrels, in line with expectations, and product stocks fell, too, according to a weekly report from the Energy Information Administration on Wednesday.
Distillate stocks fell 340,000 barrels, against analyst expectations for a 300,000 barrel gain, while gasoline inventories declined 694,000 barrels, in line with forecasts.
Inventories at the key Cushing, Oklahoma, hub fell 581,000 barrels to 34.95 million barrels. Cushing, the delivery point for the New York Mercantile Exchange’s benchmark West Texas Intermediate (WTI) crude futures, is partly fed by the shut Enbridge line.
ICE Brent crude for November, the front month after October’s expiry on Wednesday, declined 37 cents to $79.05, maintaining a hefty premium against front-month WTI.
“With the latest Norwegian production statistics revealing a year-on-year fall in output in August of 417,000 barrels per day, the heaviest fall in any month in more than three years, combined with relatively low European crude inventories and the dispersal of floating storage, it is not difficult to find a set of reasons why the Brent market should be considerably tighter than that of WTI,” Barclays Capital analysts said in a weekly report.
In other markets, the dollar posted its largest daily gain against the yen in nearly two years as Japan began selling its currency on foreign exchange markets on Wednesday, while global economic uncertainties weighed on stocks.
The yen drifted higher on Thursday as traders waited to see if Tokyo would intervene in currency markets for a second day, while Japanese stocks edged up to a one-month high, led by exporters.
Tropical Storm Karl hit Mexico’s Yucatan Peninsula on Wednesday and could reach hurricane strength once it enters the Gulf of Mexico, where it could swing past major Mexican oil installations.