Oil prices hit new five-week intraday lows on Thursday after U.S. crude stocks data compounded concerns over a global glut and as investors remained skeptical about OPEC’s planned production limit.
U.S. crude settled down 68 cents, or 1.5 percent, at $44.66 per barrel, it’s weakest close since Sept. 23. The contract’s lowest level of the session was $44.37.
Meanwhile, gasoline futures were down 1.7 percent after Colonial Pipeline said “substantial progress was made” in repairing a major gasoline line following an explosion on Monday that has shut the crucial supply pipeline to the East Coast.
Traders said energy monitoring service Genscape reported a weekly build of 1.2 million barrels at the U.S. delivery base in Cushing, Oklahoma.
That further dragged down oil prices after Wednesday’s dive to a five-week low. U.S. government data released Wednesday showed stockpiles of oil in the United States surged a record 14.4 million barrels last week.
Futures were earlier underpinned by concerns about supply disruptions after militants in Nigeria’s southern Niger Delta oil hub attacked a pipeline operated by the Nigerian National Petroleum Corporation on Wednesday.
Sources said the attack cut the country’s output by at least 200,000 barrels. Nigeria has been hamstrung in months by rebel activity on pipelines and other oil facilities.
A softer dollar also buoyed prices by making dollar-denominated oil less costly for importing countries.
The dollar slipped for a third session as positioning for next week’s U.S. presidential election overshadowed the Federal Reserve’s latest review, in which policymakers signaled they were on track to hike rates next month.
Futures had risen to one-year highs in October, when market participants were cautiously optimistic that a preliminary agreement by OPEC to cap or cut production would lead to a more balanced market.
The Organization of the Petroleum Exporting Countries (OPEC) meets on Nov. 30 in Vienna, where members are expected to hammer out a deal to limit production. Two years of global oversupply and low prices have hurt states’ budgets.
OPEC has not made clear how much each individual member should cut, and several have been resistant. Market watchers have grown more skeptical that a concrete deal can be reached or enforced, putting a lid on any price rally.
“Since things have clearly bogged down into negotiations about old-fashioned quotas – precisely what OPEC had wisely shied away from for more than a decade – ministers now face a very tall mountain,” Credit Suisse analysts said in a note.
OPEC had hoped that major non-OPEC producers, particularly Russia, would join any deal to cut production. While Russia has signaled this could be possible, crude output hit a post-Soviet record of 11.2 million barrels per day in October.
“There is a massive market-share battle going on between Russia and Middle Eastern oil producers that sees Saudi oil ending up in Poland and Russian crude in traditional OPEC markets in the Far East,” London broker PVM said, citing reasons why it believes Russia will not participate in a deal.
“Last but definitely not least … Russia is in dire economic difficulty and needs cash.”
OPEC approved a document last week outlining its long-term strategy, a sign its frequently dissenting members are coming to an agreement on managing production.