(Bloomberg) — Oil steadied near the highest level in almost four years as supply crunch fears outweighed expectations for an increase in American crude inventories.
Futures in New York were little changed to trade near $75 a barrel. Supply losses from Iran to Venezuela continued to rattle markets, boosting volatility and driving prices to the highest since November 2014. The ongoing outlook for a tightening of crude markets overshadowed forecasts for a second weekly gain in U.S. stockpiles.
Crude has gained more than 20 percent this year on growing concerns the Organization of Petroleum Exporting Countries and its allies’ pledge to pump more won’t be enough to offset losses from American sanctions on Iranian oil. The Persian Gulf state’s exports appear to have declined by more than the market expected, with South Korea, Japan and India already shunning supplies before the sanctions due Nov. 4.
“There’s no doubt there is a clear uptrend,” Michael McCarthy, chief market strategist for Asia Pacific at CMC Markets in Sydney, said by phone. In terms of expectations for U.S. inventories, “while the market is expecting a gain on average, a surprise draw could be the leg up to the next level” for prices.
West Texas Intermediate for November delivery traded 1 cent lower at $75.22 at 12:02 p.m. in Singapore. The contract closed down 0.1 percent Tuesday after to the highest close since Nov. 24, 2014 in the previous session. Total volume traded was about 49 percent below the 100-day average.
Brent for December settlement was up 3 cents at $84.83 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 0.2 percent to $84.80 a barrel on Tuesday. The global benchmark crude traded at a $9.78 premium to WTI for the same month.
While OPEC struggles to fill the void created by Iran and Venezuela, the talks between Saudi Arabia and Kuwait on restarting two oil fields in a neutral zone are said to have stalled again. The start-up could lead to an additional 500,000 barrels a day in production. Currently, most OPEC producers are pumping at, or close to, full capacity, with only Saudi Arabia able to increase output significantly.
In the U.S., crude inventories are estimated to have increased 1.5 million barrels last week, according to a Bloomberg survey of 13 analysts. The responses varied widely, with one analyst forecasting a 3.65-million-barrel gain, while some others predict a decrease of 2.5 million to 3 million barrels. Meanwhile, the industry-funded American Petroleum Institute was said to report stockpiles rose by 907,000 barrels last week.
The API data also pointed to an increase at the U.S. storage hub of Cushing, Oklahoma, of more than 2 million barrels. That would be the largest net build since March if confirmed by the Energy Information Administration’s figures Wednesday.
Other oil-market news: The Cboe/Nymex Oil Volatility Index has surged almost 19 percent since its recent low in late August. China is set to boost its crude imports from West Africa to the highest in at least seven years this month as the trade war with the U.S. prompts the Asian nation’s refiners to find alternatives. The Bloomberg Commodity Index was little changed after rising for four days, trimming this year’s loss to less than 1 percent.
With assistance from Stephen Stapczynski. To contact the reporter on this story: Sharon Cho in Singapore at firstname.lastname@example.org. To contact the editors responsible for this story: Pratish Narayanan at email@example.com Anna Kitanaka, Sungwoo Park.