Oil posts its biggest weekly drop since May

Bloomberg

Oil took a downward turn as concerns eased about Tropical Storm Nate’s threat to offshore crude platforms and coastal refineries while prices broke through a key technical barrier.
Futures slipped 3 percent in New York, bringing this week’s decline to the steepest since May. While BP Plc, Chevron Corp. and other explorers cleared workers from the Gulf of Mexico and refiners in Louisiana braced for Nate to make landfall, forecasters don’t expect the storm’s strength or track to menace most energy infrastructure. Meanwhile, the U.S. benchmark closed below
its 200-day moving average, a key
technical level.
Nate is expected to veer “away from generally the bulk of production, so you have the corresponding pull-back here” in prices, said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. Meanwhile, traders who focus on chart movements and other technical analysis interpreted crude’s drop through its 200-day moving average as a “sell signal.”
Oil’s brief rally into bull-market territory last month is fading from memory amid an OPEC-led effort to whittle away a global glut stretching back to late 2016. Output from the Organization of Petroleum Exporting Countries increased last month and Libya restarted its biggest oil field. Meanwhile, U.S. crude output reached a two-year high in the most recent government data.
The US still has a supply overhang that needs to be worked off and on top of that, the world’s biggest economy is entering a season of the year when fuel demand typically weakens, Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors LLC, said in a telephone interview. “I wouldn’t call it a glut but I would definitely call it still oversupplied.”
West Texas Intermediate for November delivery tumbled $1.50 to settle at $49.29 a barrel on the New York Mercantile Exchange, the lowest level in three weeks. The U.S. benchmark posted a 4.6 percent weekly decline. Total volume traded was about 3 percent above the 100-day average.
Nate is on track to strike near New Orleans overnight Saturday. The Louisiana Offshore Oil Port stopped offloading operations. Shell shut its Mars, Ursa, Olympus and Ram Powell platforms and ConocoPhillips said it would evacuate staff from its Magnolia installation.
Phillips 66’s Alliance refinery was preparing to shut ahead of the storm while Shell was said to have reduced operating rates at its Norco location. Both plants are in Louisiana.
The U.S. oil rig count fell by 2 to 748, according to Baker Hughes data released Friday. Nigerian crude output fell to 1.67 million barrels a day last month from 1.72 million in August, according to the Ministry of Petroleum Resources.