Oil Speculators Are Selling As Global Production Continues To Climb

The only volatility in the market comes from the continued fall in oil prices. WTI oil fell 24 cents in the Asian session to trade at 43.67 and Brent sea oil fell to 46.35. The decline in oil prices is weighing on energy stocks around the globe and also keeping market sentiment near risk off mode. The outlook for global demand improved a bit as stocks rallied on speculation the Federal Reserve will keep interest rates low through the year. Prices tanked earlier in the week amid signs the global supply glut will worsen before coming under control sometime in 2017. The IEA warned that non-OPEC production is picking up. Crude oil prices rose about 1 percent or more on Thursday after tracking a rally in gasoline futures sparked by a delayed restart of the main gasoline line at Colonial Pipeline, the No. 1 carrier for the motor fuel in the United States.

The US oil rig counts released later today are expected to have risen again this week. According to the U.S. Energy Information Administration, distillate inventories including diesel, increased by 4.619 million barrels last week, much higher than expectations for a rise of 1.543 million barrels. The jump was the biggest weekly build since January and put distillate stocks at six-year seasonal highs. The report also showed that gasoline inventories rose by 567,000 barrels, disappointing expectations for a 343,000-barrel drop. For crude oil inventories, the EIA reported a drop of 559,000 barrels, compared to forecasts for a gain of 3.8 million barrels.

Over the previous two sessions, oil prices fell 6 percent, pressured by data showing large weekly builds in U.S. petroleum products, and forecasts by the world’s energy watchdog and OPEC that signaled the global crude glut could persist into 2017.

Meanwhile, oil traders continued to weigh prospects that major oil producing nations will freeze output to support the market when they meet later this month. The Organization of the Petroleum Exporting Countries, led by Saudi Arabia and other big Middle East crude exporters, will meet non-OPEC producers led by Russia at informal talks in Algeria between September 26 and 28. An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran’s refusal to take part of the initiative, underscoring the difficulty for political rivals to forge consensus.

Libya is resuming oil exports from some of its main ports which forces loyal to eastern commander Khalaf Haftar seized in recent days and has lifted related “force majeure” contractual clauses, the National Oil Corporation (NOC) said on Thursday.

Authorities in a port controlled by Yemen’s Houthi movement have seized two oil tankers from international traders in a payment dispute, according to the ships’ owners, an incident which could make it more difficult for the country to import vital supplies.

Speculators expect prices to trade range bound for the day, on worries that U.S. rig counts would continue to rise and that returning Libyan and Nigerian exports would stoke a global supply glut.