Oil Falls to One-Month Low, Shrugging Off Fuel Pipeline Blast

(Bloomberg) -- Oil slipped to a one-month low as speculation that U.S. crude stockpiles increased last week outweighed the impact of a fuel pipeline blast.

Crude fell 0.4 percent in New York. Crude supplies probably rose by 2 million barrels, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Futures rose earlier as the pipeline explosion in Alabama and resulting blaze shut the mainlines of Colonial Pipeline Co., which carries fuel to New York Harbor from refineries in the Houston area. Prices retreated after the pipeline's owner said it expects to restart service on one of the lines at noon local time Saturday.

Oil has dropped about 6 percent since the Organization of Petroleum Exporting Countries failed Friday to agree on country quotas as part of executing it's output-cut accord. The chance of OPEC reaching a deal at the Nov. 30 summit is low due to discord, according to Goldman Sachs Group Inc. This isn't the view of Francisco Blanch, Bank of America Merrill Lynch's head of commodity research, who said on Bloomberg television that he expects an accord.

"Crude oil isn't getting much sympathy buying, which speaks to bearish sentiment," said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. "The focus has been on the breakdown of OPEC, non-OPEC talks. The fact that we aren't rallying speaks volumes to how the global supply glut is weighing on the market."

West Texas Intermediate for December delivery fell 19 cents to $46.67 a barrel on the New York Mercantile Exchange. It's the lowest settlement since Sept. 27. Prices lost 2.9 percent in October, the first monthly decline since July. Total volume traded was 46 percent above the 100-day average at 4:38 p.m.

U.S. Stockpiles

Futures dropped from the settlement after the industry-funded American Petroleum Institute was said to report U.S. crude supplies rose by 9.3 million barrels last week. December WTI traded at $46.36 at 4:37 p.m. in New York.

Brent for January settlement declined 47 cents, or 1 percent, to $48.14 a barrel on the London-based ICE Futures Europe exchange. It was the lowest close since Sept. 27 and the first below the 100-day moving average since the same date. The global benchmark closed at an 90-cent premium to January WTI.

The EIA is forecast to report that stockpiles of both gasoline and distillate fuel dropped in the week ended Oct. 28, according to Bloomberg's survey. Crude supplies, which have dropped in seven of the past eight weekly reports, remain at the highest seasonal level in more than three decades, according to weekly government data compiled since 1982.

"Prices rallied in September and October on a lot of OPEC talk and North American stockpile draws," said Tim Pickering, founder and chief investment officer of Auspice Capital Advisors Ltd. in Calgary. "We've had a modest pullback, which is healthy. We need to get through the election next week before the market makes its next move."

Democrat Hillary Clinton faces Republican Donald Trump in the U.S. presidential election on Nov. 8. Clinton has plans to reduce dependence on fossil fuels, while Trump has pledged to roll back environmental rules that have hurt coal.

Second Shutdown  

The Colonial pipeline explosion marked the second time in two months the company had to close the lines. A spill on Sept. 9 knocked them offline for 12 days, cutting supplies to 50 million Americans in the Southeast. The company, owned by a group that includes Koch Capital Investments Co. and a unit of Royal Dutch Shell Plc, said its projected restart time for Line 1 may change as it gets more access to the site of the blast, which killed one person and sent five others to hospitals for treatment.

December gasoline futures rose 6.46 cents, or 4.6 percent, to close at $1.4841 a gallon after climbing as much as 15 percent in early trading. Diesel for December delivery advanced 1.3 cents, or 0.9 percent, to settle at $1.5169.

Oil-market news:

• OPEC and other major oil producers are “on course” to deliver a deal this month that will temper the global oversupply, according to the group's Secretary-General Mohammed Barkindo.
  
• Russia's monthly output in October is set to reach its highest level in almost 30 years, according to preliminary government data.

--With assistance from Laura Blewitt To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net. To contact the editors responsible for this story: Carlos Caminada at ccaminada1@bloomberg.net, Susan Warren