Oil steady under $75 after US inventory gains

Oil steady under $75 after US inventory gains

Singapore: Oil was steady below $75 on Thursday after government data showed an unexpected increase in US crude and gasoline stockpiles, ahead of key jobs and housing reports later in the day.

The inventory increase last week, despite the eight day-long shutdown of the biggest pipeline shipping Canadian crude to the US, reaffirmed views that prices would mostly remain rangebound for the rest of the year between $70 and $80, the preferred level for Opec producers.

Front-month US crude for November rose 15 cents to $74.86 a barrel by 11:56am, while November ICE Brent fell 19 cents to $77.76. The so-called Opec basket price that the organisation uses to gauge the rate of crudes from its members has averaged $75.24 so far this year.

“The oil price that key Opec leaders signalled as being a fair and reasonable one during the weakest phase of the economic cycle has dominated the year, even if it could now be argued that the economic cycle has moved on a bit," Barclays Capital analysts headed by Paul Horsnell said.

The Organization of the Petroleum Exporting Countries should keep its oil output targets unchanged at a meeting next month and comply more closely with its production agreements, the top oil official for Opec member Libya said on Wednesday.

Markets will be looking at a weekly employment report and housing data for the United States later on Thursday, seeking evidence that the economic recovery in the world’s largest oil consumer is continuing apace.

With the latest gains inUS oil inventories, the “overhang above the five-year average has pushed above 100 million barrels for the first time in the current cycle," Barclays said.

US total petroleum stockpiles climbed to a record 1.144 billion barrels last week, the Energy Information Administration said in a Wednesday report, the highest level since it began collecting weekly data in 1990.

The nation’s crude inventories rose 970,000 barrels in the week to 17 September as imports increased, according to the EIA.

Analysts polled by Reuters had expected a decrease of 1.9 million barrels after a leak forced the shutdown of Enbridge’s 670,000-bpd 6A pipeline, which supplies refineries in the Midwest and carries Canadian crude oil to the key storage hub in Cushing, Oklahoma. The duct halted shipments from 9-17 September.

Crude stocks at Cushing, the pricing point forUS crude, fell by 210,000 barrels last week to 34.74 million barrels, their seventh straight drop, the EIA said.

The drop in Cushing supplies helped narrow the premium of DecemberUS crude to the November contract to about $1.37 a barrel from $1.59 at Wednesday’s settlement. It also helped narrow the premium of November Brent to theUS benchmark West Texas Intermediate (WTI).

Gasoline stocks rose unexpectedly by 1.59 million barrels, while distillate supplies of fuels including heating oil and diesel increased slightly more than forecast, adding 347,000 barrels.

U.S. regulators on Wednesday approved a gradual restart of an Enbridge Inc oil pipeline that ruptured more than eight weeks ago, Line 6B, fouling a Michigan river system and squeezing oil supplies forUS and Canadian refiners.

In other markets, the US dollar was on the defensive on Thursday as talk the Federal Reserve will soon start printing more of the currency drove down Treasury yields and kept the greenback pinned near a five-month low against the euro.

Major stock markets declined on Wednesday as some technology companies slumped and the Federal Reserve’s downbeat assessment of theUS economy weighed on sentiment. Holidays in Japan, China, Hong Kong and South Korea kept some major stock markets closed on Thursday.

TheUS National Hurricane Center on Wednesday said there was a 60 percent chance a tropical depression could form in the central southern Caribbean Sea over the next 48 hours.

Most computer weather models continued to forecast the system would move west across the Caribbean and hit Central America in Honduras or Belize in about four or five days, missingUS oil and natural gas operations in the northern Gulf of Mexico.