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Seoul - Oil traded near its lowest close in a month as investors weighed the outlook for shrinking US crude stockpiles against forecasts for increasing fuel supplies.
Futures lost as much as 0.5% New York after dropping 1% on Monday. US gasoline and distillate inventories probably climbed last week, according to a Bloomberg survey before a report from the Energy Information Administration on Wednesday.
Meanwhile, nationwide crude stockpiles are forecast to have decreased for a fourth week from a record. The industry-funded American Petroleum Institute will release its supply data on Tuesday.
Oil has fallen the past two weeks on concerns increasing US crude production will offset efforts by the Organisation of Petroleum Exporting Countries and its allies to ease a global supply glut.
While Fereidun Fesharaki, the head of industry consultant FGE, says OPEC is certain to extend output cuts when its ministers meet later in May, industry data showed American rigs targeting crude climbed to the highest level in two years.
“Rising oil-product stockpiles in the US may simply mean that refineries are building up supplies prior to the OPEC-led group’s extension of output cuts, but the market’s still concerned because they are abnormally expanding,” Hong Sung Ki, a commodities analyst at Samsung Futures, said by phone in Seoul.
“We are almost certain at this point that OPEC and its allies will extend the deal beyond June.”
West Texas Intermediate for June delivery dropped 21 cents to $48.63 a barrel on the New York Mercantile Exchange at 09:00 in Singapore. Futures fell 49c to $48.84 on Monday, the lowest settlement since March 28. Total volume traded was about 37% below the 100-day average.
US fuels
Brent for July settlement fell 17c to $51.35 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 53c to settle at $51.52 a barrel on Monday. The global benchmark crude traded at a $2.39 premium to July WTI.
Supplies of gasoline probably rose 1 million barrels to 242 million and inventories of distillate fuel, a category that includes diesel and heating oil, surged 1.5 million barrels to 152.4 million last week, according to a Bloomberg survey of eight analysts.
Nationwide crude stockpiles are forecast to have dropped by 3.25 million to 525.5 million barrels in the week ended April 28.
Oil-market news:
Oil prices will reach $60 a barrel by the year-end amid strong demand and trade in the $60s in 2018 with little downside, Amrita Sen, Energy Aspects chief oil analyst, said at the Argus conference in Calgary.
The US is in the position to be energy-dominant, not just independent, thanks to fracking and plans to loosen drilling regulations, the nation’s Interior Secretary Ryan Zinke said on Monday.
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