By Nicole Friedman
U.S. oil prices recovered from intraday losses Wednesday to end
nearly flat, as the market continued to look oversupplied.
Oil futures have plunged for months as global supplies have
increased and demand growth has failed to keep up. Brent, the
global oil benchmark, is down more than 25% from its mid-June
high.
On Wednesday, the U.S. benchmark fell as low as $80.01 a barrel
on the New York Mercantile Exchange after U.S. retail sales data
was released.
The contract rebounded and wavered between gains and losses
Wednesday before settling down 6 cents, or 0.1%, at $81.78 a barrel
on the New York Mercantile Exchange, the lowest level since June
28, 2012.
"People are definitely concerned about both the supply and
demand side of the equation," said Adam Wise, managing director at
John Hancock Financial Services, who helps oversee about $6 billion
in oil and gas bond investments. He added that $80 a barrel is an
important psychological level.
"Should you see a 7 on the front side of the oil price, I think
people would definitely refocus--even more so--their downside
scenarios," he said.
However, the market's sharp slide has also prompted some traders
who had bet on lower prices to close out their positions, according
to market participants.
"Nothing can go down forever without a rally, a short-covering
rally," said Donald Morton, senior vice president of Herbert J.
Sims & Co. "We could bounce back a bit, but I don't think it's
going to change the trend just yet."
Brent, the global benchmark, fell $1.26, or 1.5%, to $83.78 a
barrel on ICE Futures Europe, the lowest settlement price since
Nov. 23, 2010.
U.S. retail and food sales fell 0.3% in September from August,
posting the first monthly decline since January. Economists
surveyed by The Wall Street Journal had expected a 0.1%
decrease.
Even though gasoline prices were at four-year lows for the time
of year, sales at gasoline stations fell 0.8% from August and 2.5%
from a year before, indicating that cheaper gasoline didn't spur
increased demand from drivers.
The national average for retail gasoline fell to $3.177 a gallon
Wednesday, the lowest price since Feb. 22, 2011, according to motor
club AAA. One-third of U.S. gas stations are offering pump prices
below $3 a gallon, AAA said, compared with less than 4% of stations
a year ago.
Traders are concerned that the Organization of the Petroleum
Exporting Countries is unlikely to cut output to raise prices.
OPEC's next meeting is Nov. 27.
Iran said Tuesday that it is comfortable with current prices,
surprising many market watchers. And Saudi Arabia, the largest OPEC
producer, has sent mixed signals about whether prices are too low
for the country's budgetary needs.
"There was, before, a belief in the implicit support that OPEC
would provide," Mr. Wise said. "With sentiment moving away from
that, I think people are getting more concerned. You're seeing that
reflected in the price."
In the U.S., traders are waiting for weekly inventory data from
the Energy Information Administration, which is due to be released
Thursday.
Analysts expect the agency to report that oil supplies rose by
2.2 million barrels in the week ended Oct. 10, according to a Wall
Street Journal survey. Analysts also expect the report to show that
gasoline supplies fell by 1.4 million barrels and distillate stocks
fell 1.7 million barrels.
The American Petroleum Institute, an industry group, is
scheduled to release its inventory data for the same period later
Wednesday.
November reformulated gasoline blendstock, or RBOB, settled down
3.15 cents, or 0.4%, at $2.1487 a gallon, the lowest level since
Nov. 23, 2010.
November diesel slipped 1.36 cents, or 0.6%, to $2.4586 a
gallon, the lowest settlement since Dec. 10, 2010.
Write to Nicole Friedman at nicole.friedman@wsj.com
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