US crude oil futures hit a fresh four-month low on Tuesday, pressured by forecasts for rising supplies and continued weak demand as Gulf Coast refineries were expected to remain offline at least through the end of this week. US crude has fallen in five out of the past six sessions. Brent crude oil fell on Tuesday after hitting a four-month low the previous session.
A steady build in US oil stocks has kept prices under pressure in recent weeks. Data is expected to show a new weekly increase of around 1.6 million barrels, its seventh in a row, according to a Reuters poll ahead of reports from industry group the American Petroleum Institute (API) and the Energy Information Administration (EIA). Stocks at Cushing, Oklahoma, the delivery point for US benchmark futures, rose by more than 2 million barrels, the largest build since December 2012, in the week ending October 25.
"North America is creating an avalanche of oil that doesn't seem to have a home right now," said Gene McGillian, an analyst at Tradition Energy in Stamford, Illinois. Brent crude shed 90 cents to settle at $105.33 a barrel, after hitting a four-month low of $105.13 overnight. US oil fell $1.25 to settle at $93.37 a barrel, after posting a fresh four-month low of $93.07 earlier in the session. The US front-month contract has lost nearly $19 since late August, when it traded above $112.
The spread between Brent and WTI widened 35 cents to close the session at $11.96. US gasoline futures bounced off a near-two year low of $2.5153 a gallon reached in the previous session but finished slightly down from the previous day's close at $2.5161, dragged down by the weak US crude oil market was leading the complex down. "Gasoline just got taken down with the crude, basically," said John Kilduff, partner at Again Capital LLC in New York.
The US dollar traded around 0.2 percent higher against a basket of currencies throughout the day, keying off a Tuesday report from the Institute for Supply Management (ISM) showed US service-sector business activity picked up in October, which could strengthen the case for the Federal Reserve to start scaling back stimulus later this year. "I think the ISM number would suggest more tapering from the Fed," said Phil Flynn, an analyst at the Price Futures Group in Chicago, Illinois.
"Do you really want to be long oil as you're facing potential record supplies, uncertain demand and a higher dollar?" Renewed tensions in Libya and Egypt offered some support to prices. Heavy shooting erupted early on Tuesday in Tripoli, the latest unrest in the Opec producer that highlights the government's inability to control militia groups.
Recent protests and strikes at ports and oilfields had already knocked Libyan crude production down to some 10 percent of its capacity of 1.25 million barrels a day. The government has been trying to reopen eastern oil ports and fields blocked since summer by militias and tribes demanding a greater share of power and oil wealth. Tensions in Egypt, where ousted president Mohamed Morsi went on trial and could face a death sentence, also supported oil.
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