Oil traded near the lowest price in six years amid speculation the global glut that drove prices into a bear market will be prolonged.
Futures were little changed in New York after slipping 1.5 percent Monday. While U.S. crude stockpiles are projected to decline for a fourth week through Aug. 14, inventories will remain more than 90 million barrels above the five-year average for this time of the year. OPEC can do little to halt the price slide on its own and needs producers from outside the group to help in reducing supplies, Algeria’s Energy Minister said.
Oil has slumped more than 30 percent from the year’s closing peak in June amid signs that the global glut will persist. The recovery of Iranian supply after the removal of international sanctions may boost output from the Organization of Petroleum Exporting Countries to a record 33 million barrels a day, according to Iran’s OPEC representative.
“The glut story is getting worse,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “There is also uncertainty in global economies, particularly China, and a lot more talk about Iranian supply.”
West Texas Intermediate for September delivery was at $41.81 a barrel on the New York Mercantile Exchange, down 6 cents, at 12:38 p.m. Singapore time. The contract fell 63 cents to $41.87 on Monday, the lowest close since March 2009. The volume of all futures traded was about 30 percent below the 100- day average. Prices have decreased 22 percent this year.
Brent for October settlement was 13 cents lower at $48.61 a barrel on the London-based ICE Futures Europe exchange. The contract slid 45 cents to $48.74 Monday. The European benchmark crude traded at a premium of $6.30 to WTI for the same month.
Crude stockpiles in the U.S., the world’s biggest oil consumer, probably shrank by 820,000 barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Wednesday. That will be the smallest decline this year, according to EIA data.
The market surplus is about 3 million barrels a day, Iran’s state-run Islamic Republic News Agency reported Sunday, citing the nation’s OPEC representative Mehdi Asali. A supply cut by the 12-member group alone can’t guarantee a return to oil market stability, Algeria’s Salah Khebri said at an event in Algiers, according to Liberte newspaper.
Khebri called earlier this month for an OPEC emergency meeting to address the price decline. Algeria’s initiative had the backing of Libya and Venezuela, while top producer Saudi Arabia made no public response to the request.