Oil fell a sixth day, heading for the longest run of declines since February on speculation that easing global supply disruptions will offset a decline in U.S. crude stockpiles.
Futures slid as much as 1.4 percent in New York after dropping 6.3 percent the previous five sessions. Output in Canada is expected to ramp up this month after wildfires cut production, while Nigerian militants are pursuing peace talks with the government. U.S. stockpiles dropped for a fourth week to 531.5 million barrels and remain about 33 percent above the five-year seasonal average, the U.S. Energy Information Administration said Wednesday.
Oil’s 80 percent rally from a 12-year low in February is faltering on speculation that higher prices will encourage more output and as global supply disruptions ease. Nigerian militants, whose attacks on oil infrastructure have cut the country’s output to its lowest level in 27 years, said they are considering peace talks for the first time.
“We still, when you think about it, have a surplus of supply because it has really only been disruptions that have seen that surplus disappear,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “The market is now starting to suggest that once the disruptions are behind us, surplus will re-appear and the rally that we have seen in the prices will evaporate.”
WTI for July delivery fell as much as 66 cents to $47.35 a barrel on the New York Mercantile Exchange and was at $47.44 at 7:56 a.m. London time. Total volume traded was 16 percent below the 100-day average. The contract slipped 48 cents to settle at $48.01 on Wednesday.
Brent for August settlement declined as much as 51 cents to $48.46 a barrel on the London-based ICE Futures Europe exchange. Prices on Wednesday dropped 86 cents, or 1.7 percent, to $48.97. The global benchmark crude traded at a 53-cent premium to WTI for August delivery.
U.S. stockpiles declined 933,000 barrels last week, EIA data showed. The drop was smaller than the 2.33 million barrel slide forecast in a Bloomberg survey. Crude inventories at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, rose to 66.5 million barrels.
Gasoline demand in the U.S. last week tied a record high set in August 2007, according to EIA data released Wednesday. Completion of drilled but uncompleted wells in the U.S. will accelerate at a WTI price of $50 a barrel, while $60 oil will trigger an increase in the rig count, according to a report from Citigroup Inc.