Crude extends biggest loss in three weeks

Bloomberg

Oil extended its biggest loss in three weeks before the release
of US crude inventory data
on Wednesday, while Goldman Sachs Group Inc. cautioned
that any OPEC deal to freeze output may only deepen the global oversupply.
October futures fell as much as 1.7 percent in New York after declining for the first time in eight days on Monday. Crude stockpiles probably dropped by 1 million barrels last week, a Bloomberg survey showed before a government report. If OPEC and some producers from outside the group agree to cap output at informal talks next month, the resulting price boost may help other suppliers revive production, Goldman Sachs analysts wrote.
Oil entered a bull market last Thursday, having climbed more than 20 percent since dipping below $40 a barrel earlier in the month. Crude was driven higher partly by speculation that discussions among members of the Organization of Petroleum Exporting Countries may lead to action to stabilize the market. Prices subsequently retreated as Iraq sought to increase exports and Nigerian militants called an end to hostilities, potentially boosting supply.
“We’re expecting the availability of crude supply to improve,
causing a counter-seasonal build in inventories in the second half,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich.
“This will favor lower prices in the short run.”

US Supplies
West Texas Intermediate for October delivery lost as much as 79 cents to $46.62 a barrel on the New York Mercantile Exchange and was at $47.02 as of 12:16 a.m. London time.
The September contract expired Monday after dropping $1.47 to close at $47.05, the biggest decline since Aug. 1. Total volume traded Tuesday was about 21 percent above the 100-day average.
Brent for October settlement lost as much as 66 cents, or 1.3 percent, to $48.50 a barrel on the London-based ICE Futures Europe exchange, having slipped 3.4 percent on Monday. The global benchmark crude traded at a $1.73 premium to WTI.
U.S. gasoline stockpiles probably shrank by 1.5 million barrels for a fourth week of declines, according to the median estimate in a Bloomberg survey before the Energy Information Administration report.
Crude and motor-fuel inventories are still at their highest seasonal level in at least two decades.
In Nigeria, the cease-fire declared by the Niger Delta Avengers should be viewed with caution, according to Commerzbank AG and Global Risk Management Ltd.
The Avengers have previously distanced themselves from talks with the government.
China’s oil demand may be cut by 250,000 barrels a day in the third quarter of the year as the country limits pollution from
factories before a Group of 20 summit in early September, according to consulting firm Energy Aspects Ltd.