“Oil continues to come under pressure from the idea that we have ample supplies,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The dollar is throwing pressure on oil.”
WTI for October delivery dropped 66 cents, or 0.7 percent, to end at $92.41 on the New York Mercantile Exchange. The volume of all futures traded was about 5.8 percent below the 100-day average. Prices gained 14 cents this week, snapping a two-week losing streak. The October contract expires on Sept. 22. Brent for November settlement gained 69 cents to $98.39 a barrel on the London-based ICE Futures Europe exchange, for a weekly gain of 1.3 percent. Volume was 32 percent below the 100-day average.
WTI for November was at a discount of $6.72 to Brent for the same month, compared with $5.72 yesterday. “You are seeing liquidation of the October futures before expiration,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.
Gasoline futures rose 2 percent to $2.6114 a gallon on the Nymex, the biggest daily increase since Sept. 3. Prices are up 3.7 percent this week. Ultra low sulfur diesel climbed 0.2 percent to $2.7166. The fuel fell 0.9 percent this week.
Conventional, 85-octane gasoline blendstock, or CBOB, in the Gulf reached a premium of 2 cents a gallon versus Nymex futures, the highest level since October 2012, data compiled by Bloomberg showed. Refiners including Exxon Mobil Corp. (XOM) and Marathon Petroleum Corp. (MPC) were said to be performing repairs at plants in the Gulf.
“The Gulf Coast gasoline market has been steadily rising to the point where people no longer want to ship gasoline all the way to New York Harbor,” said Andy Lipow, president of Lipow Oil Associates LLC, an energy consulting firm in Houston, Texas. “As a result, the RBOB price in the harbor has to rise to attract imports.”
Crude supplies in the U.S. climbed 3.67 million barrels in the week ended Sept. 12 to 362.3 million, near the highest ever level for this time of year, the EIA, the Energy Department’s statistical arm, said Sept. 17. Average oil demand fell in the four weeks ended Sept. 12, the EIA said.
The U.S. Dollar Index advanced for a 10th straight week, the longest rally since at least March 1967. A strong dollar reduces commodities’ investment appeal.
Fed officials, who met Sept. 16-17, increased their median estimate for the federal funds rate to 1.375 percent at the end of next year, versus June’s forecast for 1.125 percent.
“The pressure here is from the dollar,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “The market is probably going to rebound next week because of OPEC production.” A reduction in crude output from the Organization of Petroleum Exporting Countries deepened as Libya’s biggest producing oilfield stopped pumping amid supply cuts from Saudi Arabia and potential disruptions to Nigerian exports.
Libya halted the Sharara oilfield as a precaution after a rocket attack on the connected Zawiya refinery three days ago, closing down about 30 percent of national output. In Africa’s largest oil producer, state-owned Nigerian National Petroleum Corp. was in talks yesterday to prevent a strike that threatened to disrupt exports. Saudi Arabia told OPEC that in August it made the deepest production cut in 18 months.
OPEC, supplier of about 40 percent of the world’s oil, may reduce its daily quota by 500,000 barrels to 29.5 million in 2015, Secretary-General Abdalla El-Badri said in Vienna on Sept. 16.
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