Oil down 1 percent on worry of crude and fuel supply glut

Mon Jul 18, 2016 4:32pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices settled down more than 1 percent on Monday after rising stockpiles of crude and refined fuel intensified fears another major glut was building up.

Market intelligence firm Genscape reported that the Cushing, Oklahoma delivery hub for U.S. crude futures saw a supply build of 26,460 barrels in the week to July 15, traders who saw the data said.

Morgan Stanley said it still expected a supply-demand rebalancing in oil by mid-2017 but added that fundamental headwinds were growing in the market. "Tail risks are admittedly large in both directions, as geopolitics add to uncertainty."

An attempted coup in Turkey barely supported the market as Istanbul's Bosphorus Strait, which handles about 3 percent of global oil shipments mainly from Black Sea ports and the Caspian region, reopened from a brief closure.

Prices came off session lows after a labor union said a 24-hour strike on July 26 by Wood Group (WG.L: Quote) oil and gas maintenance workers employed at Royal Dutch Shell's (RDSa.L: Quote) platforms in the North Sea will severely disrupt operations.

Brent crude LCOc1 settled down 65 cents, or 1.4 percent, at $46.96 a barrel. It fell more than $1 earlier to an intraday low of $46.50.

U.S. West Texas Intermediate (WTI) crude CLc1 settled down 71 cents, or 1.6 percent, at $45.24 a barrel, after a session low at $44.86.

"We are maintaining a bearish trading stance as we still see an ultimate price downdraft in WTI and Brent to about $37 and $38 areas respectively," said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.   Continued...

A fuel tanker navigates near the Cienfuegos Oil Refinery, southeast of Havana in this February 7, 2013 file picture. REUTERS/Desmond Boylan/File