Economy- Crude-Oil Futures Settle Down 1.6% at Lowest Level Since July 2 – WSJ.com

Posted: October 18, 2013 in Uncategorized

Oct. 17, 2013

NEW YORK–Crude-oil futures prices fell 1.6% Thursday to a 3 1/2-month low near $100 a barrel amid signs of rising U.S. oil inventories and weaker demand.

Analysts said the short-term solution reached by Congress and approved by President Barack Obama to reopen the government and suspend the debt until early February does little to reassure the market that the U.S. economy will rebound, pulling up demand for oil.

A government forecast for above-normal temperatures across much of the U.S. in November through January added to pressure on prices, dealing heating-oil futures prices their biggest one-day loss in a month.

Light, sweet crude oil futures for November delivery on the New York Mercantile Exchange settled 1.6%, or $1.62, lower at $100.67 a barrel, the lowest level since July 2. The drop was the biggest one-day decline in dollar and percentage terms since Oct. 9.

The contract traded down to an intraday low of $100.03 a barrel and market participants said it is only a matter of time before prices break below the century mark.

ICE Brent crude oil for December delivery settled $1.48 lower at $109.11 a barrel. That was Brent\’s biggest drop since Sept. 19 and put it at the lowest level since Oct. 9.

A fall below $100 a barrel for U.S. crude would set the stage for a drop to as low as $88 a barrel in the near term, said Phil Flynn, analyst at Price Futures Group in Chicago.

\”The $100 level is psychological more than anything. It\’s likely to fall in coming days. The trend is negative, we\’ve got ample inventories right now and demand is not great,\” he said.

The American Petroleum Institute, a trade group, said late Wednesday afternoon that U.S. crude-oil stocks rose 5.9 million barrels in the week ended Oct. 11, compared with estimates calling for a rise of 1.7 million barrels. The API also said refinery operations dropped by 0.8 percentage point, to 86% of capacity, compared with expectations for a 0.2-point drop. Refinery processing of crude oil was at its lowest level since April, the API said.

Government workers returned to their offices on Thursday, but the Energy Information Administration said it isn\’t yet clear when it will resume publication of its widely watched weekly data on U.S. oil supply, demand and inventories.

Market players normally watch the data from the API for a hint of what the broader-based government report will show.

\”The API show a big rise in stocks. The market is really focused on supply and demand now and its looks like it\’s getting ready to roll over and die,\” said Mr. Flynn. \”If we don\’t get a cold winter, we could be looking at new range from $88 to $100 at the top.\” A drop to the low end of that range would put prices back to where they last traded in April.

U.S. crude-oil prices above $100 a barrel are a relatively short-term event in the longer-term trend. When crude settled above $100 in early July, that marked a 14-month high in prices. Flare-ups in Mideast tensions from Egypt to Syria to Libya, which have all turned relatively quiet, helped ignite a price surge to $110.53 a barrel six weeks ago, a 28-month high.

But analysts said rising U.S. oil output and a quieter tone in the Middle East oil patch, including Iran\’s cooperative attitude in negotiations regarding its nuclear program, are erasing a fear premium in prices.

Prices also face pressure on the demand side from a potential warm winter. Above-normal temperatures are likely across much of the U.S. in November through January, government forecasters said Thursday. The outlook from the National Oceanic and Atmospheric Administration shows New England as one of the areas, with the greatest likelihood of above-normal temperatures in the early winter period.

About 25% of homes in the Northeast rely on heating oil and 80% of the nation\’s heating oil users are in the region, according to EIA.

November-delivery heating-oil futures prices posted their biggest one-day decline in a month, falling 1.6%, or 4.93 cents, to $2.99 a gallon, the lowest price since Oct. 1.

via Crude-Oil Futures Settle Down 1.6% at Lowest Level Since July 2 – WSJ.com.

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