Oil ends down again; global glut offsets U.S. output drop
By Barani Krishnan
NEW YORK (Reuters) - Oil closed down on Wednesday and extended losses in post-settlement trade as worries about a growing supply glut kept crude under pressure this week, offsettting recent views that declining U.S. production would buoy prices.
Crude futures have lost more than 6 percent since a report on Monday that OPEC pumped 110,000 barrels per day (bpd) more in September than in August, and nearly 2 million bpd above demand forecast for 2015.
Oil rallied sharply in the first week of October on optimism that falling U.S. production could mitigate OPEC supply growth.
But preliminary data on Wednesday on immediate stockpiles of U.S. crude gave traders another reason to sell.
The American Petroleum Institute (API), an industry group, reported a 9.3 million-barrel build for last week, more than three times that expected by analysts in a Reuters poll.[API/S].
U.S. crude settled down 2 cents at $46.64. After the API data, it tumbled 66 cents.
Global crude benchmark Brent settled down 9 cents at $49.15, then slid 46 cents in post-settlement trade. On Monday, Brent tumbled by nearly $2.80, or more than 5 percent, after OPEC's latest production numbers were known.
Traders were waiting for Thursday's official data on U.S. crude inventory from the Energy Information Administration (EIA). The EIA could give a lower build than that cited by the API, although analysts do not expect it to report a draw due to less crude processing now from refinery maintenance works.
"A build is widely expected but if it's in the same magnitude as given by API, it will knock the stuffing out of prices," said Matt Smith, a Houston-based analyst for energy database Clipper Data.
Oil bulls took some comfort on Tuesday from an EIA forecast for a record decline in U.S. shale oil production in November. Shale, which accounts for the bulk of U.S. crude production, is expected to fall by 93,000 bpd next month, a seventh straight month of declines, the EIA said.
But other data suggested the global supply glut could grow.
OPEC trimmed its 2016 world oil demand growth estimate by 40,000 bpd to 1.25 million bpd, citing slower Chinese growth.[OPEC/M]
The International Energy Agency said oil would remain oversupplied in 2016.
The U.S. gasoline crack , the profit refiners get for turning crude into gasoline, has lost more than a quarter of its value over the last two weeks as demand for the motor fuel dropped. This could put more pressure on crude prices.
(Additional reporting by Alex Lawler in London and Meeyoung Cho in Seoul; Editing by Andrew Hay, Paul Simao and David Gregorio)
