SINGAPORE: US crude oil fell below US$99 a barrel on Tuesday, hitting its lowest since July, with the discount to European Brent hitting its widest in six months as crude oil inventories rose more than expected in the world’s largest oil consumer.
Brent crude futures held steady as investors waited for US jobs data that could provide clues on whether the Federal Reserve will delay cutting back its monetary stimulus this year, potentially stoking oil demand.
Brent crude oil futures for December delivery were up 7 cents at US$109.71 a barrel at 0246 GMT.
US crude oil futures for November delivery, which expire at the end of trade on Tuesday, slipped 26 cents to US$98.96 a barrel after earlier hitting US$98.85, the lowest since July 2.
Brent widened its premium to U.S. crude to as much as US$10.44 on Tuesday, the widest since late April.
"There are a lot of stocks of crude oil in the US and all over the world and there is still a lot of uncertainty on a US
economic recovery as there are several issues with the debt ceiling," said Ken Hasegawa, a commodity sales manager at Newedge Japan.
"Fundamentally the (US oil) market is not so strong but technically WTI could rebound today if the employment data is better than expected."
The US jobs data for September was delayed from October 4 by a partial US government shutdown caused by wrangling in Washington over fiscal matters including the debt ceiling.
Analysts polled by Reuters expect nonfarm payrolls to have increased by 180,000 in September after a rise of 169,000 jobs in August, with the jobless rate steady at 7.3 per cent.
Seasonal refinery maintenance and shifting pipeline flows around the key Cushing, Oklahoma, oil hub have helped reverse a months-long decline in stockpiles, shifting the oil market’s structure over the past two weeks.
Now, instead of a squeeze in supplies, traders are betting on a near-term surplus of inventories, at least until refineries begin to rev up operations again.
Delayed US government data for the week to October 11 confirmed the first decline in Cushing stocks in 14 weeks, while industry data suggested the drawdown had continued since then.
Oil inventories at Cushing rose 366,000 barrels to 32.99 million barrels, after shedding 17 million barrels since June 28, as pipeline bottlenecks were eased, allowing for more movement of oil out of the hub.
Overall, oil inventories in the country rose by 4 million barrels to 374.5 million, more than the increase of 2.2 million barrels forecast in a Reuters poll of analysts.
Brent crude oil was supported by a belief that the US Federal Reserve might delay curbing its monetary stimulus programme until next year.
A senior Fed official said it would be "tough" for the Fed to have sufficient confidence in the strength of the US recovery by its meeting in December to start reducing its US$85 billion-per-month bond-buying programme.
The North Sea benchmark also found support from lower global supply. Libyan output has fallen sharply and Nigerian output has been repeatedly hit by theft.--Reuters