Oil slips as U.S. reports a bigger supply of natural gasadmin
Crude oil fell below $57 a barrel Thursday for the first time in more than two weeks after an Energy Department report showed increases in U.S. inventories of natural gas, a competing fuel.
Natural gas supplies rose five billion cubic feet, or 141 million cubic meters, to 3.45 trillion cubic feet last week, the report showed. A gain of six billion cubic feet was expected, according to the median of responses in a Bloomberg News survey of 23 analysts. Some users can switch between oil-based fuels and natural gas depending on cost.
“Whatever momentum we had moving higher ended with the natural-gas number,” said John Kilduff, vice president of risk management at Fimat USA in New York. “This is a range-bound market and can’t break out. The reaction to the natural gas number seems extreme.”
Crude oil for December delivery fell $2.50 to $56.26 a barrel on the New York Mercantile Exchange, the lowest close since Nov. 18, 2005. Prices are down 2.8 percent from a year ago.
Gasoline supplies slipped 3.78 million barrels to 200.3 million last week, an Energy Department report showed Wednesday. Supplies of distillate fuels, a category that includes heating oil and diesel, fell 3.57 million barrels. Gasoline use surged last month, the American Petroleum Institute said.
“We are slowly but steadily setting the stage for a winter rally,” said James Ritterbusch, president of Ritterbusch in Galena, Illinois.
“I think the gasoline market is going to lead the way higher. There is still a surplus of distillate out there but gasoline stocks are getting tight.”
The Organization of Petroleum Exporting Countries, which produces about 40 percent of the world’s oil, agreed last month to reduce production by 1.2 million barrels a day starting Nov. 1 in an attempt to end a three- month price slide.
Gold futures for December delivery lost $2.10 to close at $623.20 an ounce on the Comex division of the New York Mercantile Exchange. Prices earlier reached $629. The metal dropped 2 percent in the previous four sessions.