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Oct. 20, 2016, 3:05 p.m. EDT

Oil futures end lower, retreat from 15-month high

November WTI contract expired at the day’s settlement

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By Myra P. Saefong, MarketWatch , Jenny W. Hsu


Oil futures finished lower on Thursday, a day after data showed an unexpected weekly drop in U.S. crude supplies and optimism surrounding the Organization of the Petroleum Exporting Countries’s plan to limit output lifted prices in New York to their highest level since mid-July of last year.

On Thursday, November West Texas Intermediate crude /zigman2/quotes/209727031/delayed CLX26 0.00%  fell $1.17, or 2.3%, to settle at $50.43 a barrel on the New York Mercantile Exchange on the contract’s expiration day. December WTI crude /zigman2/quotes/209727494/delayed CLZ26 -1.14% , which became the front-month contract at the settlement, ended at $50.63 a barrel, down $1.19, or 2.3%.

December Brent crude  on London’s ICE Futures exchange fell $1.29, or 2.5%, to $51.38 a barrel.

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“Profit-taking saw oil prices fall on Thursday, following increases the previous day due to weaker-than-expected [U.S.] inventories and optimism over OPEC agreeing on a production curb,” said Chris Todd, a U.K.-based analyst at energy consultancy Love Energy.

“However, the market remains confident, with many traders anticipating further price rises after an unexpected reduction in U.S. stocks and in anticipation of a deal at next month’s OPEC meeting,” he said.

WTI oil futures rallied Wednesday after Energy Information Administration data showed U.S. domestic crude stocks unexpectedly dropped by 5.2 million barrels in the week ended Oct. 14.

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The decrease was largely due to lower imports, analysts said.

However, with total crude stocks at 468.7 million barrels, they’re still 5.4% higher than the same period last year and 31.5% above the five-year average.

Traders continue to watch developments tied to OPEC’s plan to cut member production by 200,000 to 700,000 barrels a day. The plan is expected to be discussed and possibly ratified in the Nov. 30 meeting.

Many market watchers aren’t enthused by the deal, saying the group’s longstanding internal tensions will make it difficult for all members to be on board. Even if a deal is struck, it remains a question if the members would obey to the production quotas.

OPEC has been concerned about growing production from non-OPEC oil producers, including Russia, which has offer mixed messages on whether it will cooperate with an output deal, and the U.S.

“OPEC will be on notice for both the need to complete the proposed deal to rein in excess production and to aim for a price level that won’t give back too much market share over the intermediate term,” said Tim Evans, a Citi Futures analyst.

Still, the World Bank said Thursday that OPEC preparations to limit output prompted it to raise its 2017 forecast for oil prices—an average of Brent, WTI And Dubai crudes—to $55 a barrel from a previous forecast of $53.

Among the petroleum products Thursday, November gasoline  fell by 2 cents, or 1.3%, to $1.494 a gallon, while November heating oil  lost 2.8 cents, or 1.8%, to $1.56 a gallon.

Natural-gas futures, meanwhile, ended lower after the EIA reported Thursday that supplies of the commodity rose 77 billion cubic feet for the week ended Oct. 14. That was slightly above the 72 billion-cubic-foot rise expected by analysts polled by S&P Global Platts.

Some of last week’s supply build is “associated with some disruptions in activity from Hurricane Matthew, but the weather was all wrong,” said Richard Hastings, macro strategist at Seaport Global Securities. Parts of the U.S. saw warmer-than-usual temperatures in October, which dulled demand for natural gas.

The reasons for the supply climb aren't unusual and do “not derail the core winter story in the second half of November, when the eastern U.S. begins to chill out more consistently,” he said.

November natural gas  finished at $3.141 per million British thermal units, down 2.9 cents, or 0.9%.

US : U.S.: Nymex
$ 48.56
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Sept. 22, 2020 5:05p
US : U.S.: Nymex
$ 48.59
-0.56 -1.14%
Volume: 0.00
Sept. 22, 2020 5:05p

Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong.

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