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Hong Kong - Oil declined as the International Energy Agency (IEA) changed its view on the global oversupply, seeing a glut persisting into 2017.
Futures dropped as much as 2.4% in New York after gaining 0.9% on Monday. The global oil surplus will last longer than previously thought as demand growth slumps and supply proves resilient, the IEA said in its monthly report.
US crude inventories probably increased by 4 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Wednesday.
Oil has fluctuated since rallying in August amid speculation the Organisation of Petroleum Exporting Countries (OPEC) and Russia would agree on measures to stabilize the market at a meeting later this month.
All solutions are possible, Algeria’s energy minister said on Friday when asked if producers could raise output within the framework of a freeze.
A deal to cap production was proposed in February but a meeting in April ended with no final accord.
"Inventories remain high, they’re well above five-year trend levels," said David Lennox, a resources analyst at Fat Prophets in Sydney.
"The market is just waiting to see what happens at the OPEC meeting. If there is a concrete deal and it’s actioned, we’d expect to see prices rally."
West Texas Intermediate for October delivery lost as much as $1.12 to $45.17 a barrel on the New York Mercantile Exchange and was at $45.28 at 9:51 a.m. in London.
The contract added 41 cents to close at $46.29 on Monday. Total volume traded was about 3% above the 100-day average.
US stockpiles
Brent for November settlement lost as much as $1, or 2.1%, to $47.32 a barrel on the London-based ICE Futures Europe exchange. The contract rose 31 cents to $48.32 on Monday. The global benchmark crude was at a $1.60 premium to WTI for November.
Consumption growth sagged to a two-year low in the third quarter as demand faltered in China and India, while record output from OPEC’s Gulf members is compounding the glut, said the IEA. Just last month, the agency saw the market returning to equilibrium this year.
US gasoline stockpiles probably dropped by 1.3 million barrels last week, according to the median estimate in the Bloomberg survey before the EIA report.
Nationwide crude supplies are at 511.4 million barrels, more than 100 million barrels above the five-year average, according to EIA data.
Oil-market news:
OPEC flipped its forecasts for rival supplies in 2017, predicting an increase in output from outside the group instead of a decline, according to a monthly report on Monday from the group.
China’s crude oil production in August dropped to the lowest level since December 2009, according to data from the National Bureau of statistics.
Anadarko Petroleum Corporation agreed to buy Gulf of Mexico oil assets from Freeport-McMoRan for $2bn and said it will use revenue generated by the offshore wells to develop its US oilfields on land.
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