Oil steadies near 4-year high as supply fears counter stockpiles

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 US stockpiles.

Crude has gained more than 20% this year on growing concerns the Organisation 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 November 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 US 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 7 cent higher at $75.30 at 2:34 p.m. in Singapore. The contract closed down 0.1% Tuesday after rising to the highest close since Nov. 24, 2014 in the previous session. Total volume traded was about 37% below the 100-day average.

Brent for December settlement was up 9 cents at $84.89 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 0.2% to $84.80 a barrel on Tuesday. The global benchmark crude traded at a $9.75 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 US, 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 US 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.

� L.P