US oil futures near four-month low on US inventory build-up fears
US oil futures near four-month low on US inventory build-up fears (Reuters).

Benchmark crude oil futures traded to the downside on 5 November, ahead of the release of two sets of data that could show that crude stockpiles in the US, the world's largest consumer of oil, have increased for a seventh week.

The December West Texas Intermediate (WTI) contract traded 12 cents lower to $94.50 a barrel on the New York Mercantile Exchange at 09:53 hrs London time.

WTI closed at $94.61 on 1 November, its lowest level since 21 June.

The volume of all futures traded was some 39% below the 100-day average.

The December North Sea Brent contract shed 10 cents to $106.33 a barrel on London's ICE Futures Europe exchange.

The European benchmark was at a premium of $11.83 to the WTI, as against $11.61 on 4 November.

US crude inventory probably increased by 2.2 million barrels to 386.1 million in the week ended 2 November, just as production surged to a 24-year high, revealed a Bloomberg poll of analysts.

The survey's results come ahead of the release of a weekly inventory report by the industry-funded American Petroleum Institute, due out on 5 November.

In addition, the US Energy Information Administration (EIA) will put out inventory data on 6 November.

Lower demand and higher supply projections in the US weighed down on oil futures.

Analysts said that crude oil futures were supported by supply disruptions in Opec-member Libya, which hopes to resume oil exports from its Marsa Al Hariga port next week.

"We have Libya on one side, adding some support, although they aim to resume some of the exports over the next week, and at the same time we have pretty weak demand figures, with the market looking ahead to tomorrow, to see what the status is in the US in particular," Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen told the news agency.

Commerzbank Corporates and Markets said in a note to clients: "Oil prices are making a slight recovery from the multi-month lows they hit [on 4 November], when Brent dipped to a four-month low of $105 per barrel for a time. At $94 per barrel, WTI at times found itself at its lowest price for 4½ months. The ongoing delivery outages in Libya are preventing prices from falling. What is more, the situation in Egypt is also likely to come back into focus given that the trial of ousted former president Morsi began [on 4 November], meaning that renewed conflicts between Morsi's supporters and opponents are on the cards".

Libyan Exports

Libya, which accounts for over 1.5% of global oil output, is now shipping around 250,000 barrels a day (bpd), Mohamed Elharari, a spokesman at state-run National Oil said on 4 November.

That is much lower than the country's 1.3 million bpd capacity, according to Bloomberg.

Libya has suffered oil supply outages since July. Protesters demanding more political rights and strikes over pay have hampered oil production and exports from the country, which holds Africa's biggest crude reserves.

US Inventory Build-Up

Global crude oil futures finished lower last week after US data showed that inventory jumped during the week ended 25 October, amid lower crude imports and slightly lower oil demand in that country.

Futures were also pulled down after the US dollar strengthened against the Euro, propped up by positive factory data from the world's biggest economy.

Data from the US Energy Information Administration showed that crude supplies rose by 4.1 million barrels in the week ended 25 October. Analysts polled by Platts had forecast an increase of 3.5 million barrels.

Crude-oil imports into the US in August, which edged up from July to a nine-month high, were 6.5% lower than a year ago.

US government data also showed that oil demand in August, which struck a 12-month high that month, was still 0.3% lower than a year ago.

Meanwhile, the greenback advanced following news that US factory activity expanded further in the month of October - a stronger dollar makes dollar-denominated oil more expensive for foreign investors.