WTI retains losses ahead of inventories reports, mixed U.S. data

West Texas Intermediate crude remained lower for the first time in four days on expectations that a report by the Energy Information Administration will show U.S. crude supplies rose for a sixth straight week. Mixed U.S. economic data weighed on demand prospects, while a sharp drop in Libyas output provided some support.

On the New York Mercantile Exchange, WTI crude for delivery in December slipped 0.46% to $98.23 per barrel by 15:52 GMT. Prices shifted in a days range between $98.62 and $97.87 per barrel. The American benchmark gained for a third day on Monday but trimmed its weekly advance to 0.4% on Tuesday.

Meanwhile on the ICE, Brent futures for settlement in December traded at $108.69 a barrel at 15:52 GMT, down 0.85% on the day. Prices held in range between days high and low of $109.52 and $108.52 per barrel respectively. The European benchmark surged 2.3% on Monday, the most since October 10, but reduced its weekly advance to 1.4% on Tuesday.

Oil prices edged lower on Tuesday on expectations that the Energy Information Administration will report on Wednesday a sixth consecutive weekly gain in U.S. crude oil inventories. According to a Reuters survey of analysts, crude supplies probably rose by 3.2 million barrels last week to the highest since June, while motor gasoline and distillate fuel inventories likely fell by 1 million barrels each.

Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said for Bloomberg: “Yet another inventory increase is expected. The reasons for the WTI weakness and increasing inventories include low refinery utilization due to maintenance and yet another strong increase in shale oil production.”

U.S. data

A string of mixed U.S. data further reinforced broad speculations that the Federal Reserve will refrain from trimming its bond purchases this year but also questioned oils demand prospects in the worlds largest consumer. A report by the Census Bureau showed that core retail sales, excluding the volatile automobile sales, rose by 0.4% in September after adding 0.1% in August and matched analysts projections.

However, total retail sales inched down 0.1% last month following the biggest drop in sales at auto dealers since October 2012. Analysts expected a 0.1% increase after Augusts 0.2% expansion. Automobile sales plunged 2.2% last month following a 0.7% increase in August.

Despite the signs of sustained strength in the U.S. economy prior to the 16-day government shutdown in October, market players await the upcoming economic data which will include the fiscal deadlock period. A report by the Conference Board showed that consumer confidence in the U.S. fell to 71.2 in October, the lowest since April. Septembers reading received an upward revision to 80.2 from initially estimated at 79.7. Analysts expected a moderate drop to 75.0.

Millan Mulraine, an economist at TD Securities in New York, said for Reuters: “This report points to continued resiliency in U.S. consumer spending activity,” referring to the retail sales numbers. “However, given the drag on confidence from the government shutdown and protracted debt ceiling fight earlier this month, this resiliency is expected to be tested.”

A separate report by the Department of Labor showed that wholesale prices in the U.S. unexpectedly dropped by 0.1%, defying analysts projections for a 0.2% expansion following Augusts 0.3% gain. This was the first decline since April. Year-on-year, the producer price index advanced by 0.3%, the least since October 2009, and underperformed both expectations for a 0.6% gain and the preceding periods 1.4% increase.

Todays overall downbeat data added to last weeks weak employment numbers and Mondays disappointing pending home sales and minor manufacturing expansion, reinforcing analysts views that the Federal Reserve should feel comfortable in refraining from tapering its stimulus this year.

Libyan output

The oil market however continued to draw support after renewed protests curbed Libyas oil exports to 90 000 barrels per day, according to Reuters calculations. This was less than a tenth of the African countrys capacity. Officials said on Monday that production has fallen to below 300 000 bpd, less than a half of what the nation pumped last month.

The state-run National Oil Corp. said yesterday that minority Tuareg nomads disrupted crude flows from the Al-Sharara field. Libya News Agency said production will resume over the next 24 hours, citing Oil Minister Abdulbari Al-Arusi.

Libya’s prime minister said exports from the eastern port of Hariga will resume in a week after protests kept it shut for two months and that would bring back online capacity of 110 000 barrels per day. However, the tribe which is controlling the terminal denied in a statement that the port was about to be reopened, marking a further blow to the governments credibility.