Oil slips below $60 as stocks swell

LONDON: Crude oil futures prices fell more than a dollar to below $60 a barrel on Tuesday, nearing a seven-month low on forecasts of a further increase in fuel inventories in top oil consumer the US.

American distillates stocks, which include heating oil, probably rose last week, analysts said. As oil slips further from a July peak, traders are watching for signs Opec will act again to support prices.

“Given comfortable middle distillate stocks, it’s hard to see a real supply worry in the winter,” said Mike Wittner, analyst at Calyon investment bank, adding “If the price comes off another couple of dollars, we’ll see more action out of Opec.”
US crude lost $1.3 to $59.8 a barrel by 1358 GMT, after falling as low as $59.7, the lowest since September 25 and close to its lowest level in seven months. London Brent dropped $1.3 to $59.2.

Further easing prices, the US energy department had stated on Monday that it would delay buying some 11m barrels of crude for the nation’s emergency reserve through the winter to keep more supply on the market.

Moves by Opec members Nigeria and Venezuela to trim output have failed to stem the slide. The measure will have little impact unless larger Organisation of the Petroleum Exporting Countries producers follow, analysts say.

Nigeria and Venezuela last week pledged to cut supply from October 1 by about 170,000 barrels per day, less than 1% of Opec’s total output.

“The Nigerian and Venezuelan announcements are significant, but they don’t remove a lot of oil from the market,” Wittner said, adding “Saudi Arabia has been conspicuous by its silence.” Opec’s second-largest producer Iran on Sunday backed any move by the 11-member group to bolster the market, while stopping short of saying it would trim its own output.

Oil has lost more than 20% since July’s peak of $78.40 due to healthy US heating fuel supplies, forecasts for a mild winter and signs of slower economic growth in the world’s largest economy.

Prices have also eased due to a lack of hurricanes in the Gulf of Mexico, home to about a quarter of US oil output. Last year, oil jumped to a then-record after Hurricane Katrina disrupted supply.

A noted hurricane forecaster, William Gray’s forecast team at Colorado State University, on Tuesday predicted the Atlantic hurricane season will see just two more tropical storms and no more ’major’ hurricanes.