Oil’s longest rally in seven years falters as OPEC supply rises

ENERGY

Oil, on its longest run of gains in seven years, barely rose on Tuesday as forecasts that U.S. stockpiles shrunk were weighed against estimates that OPEC expanded production.

Futures edged up by just one cent in New York after advancing 11 per cent in the previous eight sessions. OPEC output climbed in June to the highest level this year. The increases came from Libya and Nigeria, which are exempt from a supplycut deal, as well as Saudi Arabia and the United Arab Emirates, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. In the U. S., crude inventories probably fell by 2.5 million barrels last week, a Bloomberg survey showed before a government report Thursday.

“The bulls have had a nice little run but I would not be surprised if the bearish fundamentals take hold,” Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pa., said by telephone Tuesday. “We are beyond the peak refinery demand season for oil.”

While prices have surged in the past week, oil in New York and London posted a monthly loss in June after tumbling into a bear market on concerns that rising global supply will counter curbs from the Organization of Petroleum Exporting Countries and its partners. U. S. crude inventories remain more than 100 million barrels above the five-year average.

West Texas Intermediate for August delivery was at US$47.08 a barrel on the New York Mercantile Exchange as of 12: 59 p. m., when most trading halted. There was no settlement on Tuesday because of the Independence Day public holiday in the U. S. Futures are up US$4.55 since June 21.

Brent for September settlement fell seven cents to US$ 49.61 a barrel on the London- based ICE Futures Europe exchange. The global benchmark crude traded at a premium of US$ 2.33 to September WTI.

OPEC output rose by 260,000 barrels a day to 32.55 million in June, according to the Bloomberg News survey. Half of the increase came from Libya and Nigeria while Saudi Arabia boosted production by 90,000 barrels a day.

In other oil market news, Nigeria’s state-owned oil company said it signed a deal with Schlumberger Ltd. to provide US$ 700 million for the development of two oil fields in the country’s crude-rich south. The country’s reserves are currently estimated at 37.2 billion barrels.