HONG KONG • Oil extended its biggest loss in three weeks before the release of United States crude inventory data today, while Goldman Sachs Group cautioned that any Organisation of Petroleum Exporting Countries (Opec) deal to freeze output may only deepen the global oversupply.
October futures fell as much as 1.7 per cent in New York after declining for the first time in eight days on Monday. Crude stockpiles probably dropped by one million barrels last week, a Bloomberg survey showed before a government report.
If Opec and some producers from outside the group agree to cap output at informal talks next month, the resulting price boost may help other suppliers revive production, Goldman Sachs analysts wrote.
Oil entered a bull market last Thursday, having climbed more than 20 per cent since dipping below US$40 a barrel earlier in the month.
Crude was driven higher partly by speculation that discussions among members of Opec may lead to action to stabilise the market.
Prices subsequently retreated as Iraq sought to increase exports and Nigerian militants called an end to hostilities, potentially boosting supply.
"We're expecting the availability of crude supply to improve, causing a counter-seasonal build in inventories in the second half," said analyst Giovanni Staunovo at UBS Group in Zurich. "This will favour lower prices in the short run."
West Texas Intermediate (WTI) for October delivery lost as much as 79 US cents to US$46.62 a barrel on the New York Mercantile Exchange and was at US$46.81 as of 9.54am, London time. Total volume traded yesterday was about 36 per cent above the 100-day average.
Brent for October settlement lost as much as 66 US cents, or 1.3 per cent, to US$48.50 a barrel on the London-based ICE Futures Europe exchange, having slipped 3.4 per cent on Monday.
The global benchmark crude traded at a US$1.78 premium to WTI.
US petrol stockpiles probably shrank by 1.5 million barrels for a fourth week of declines, according to the median estimate in a Bloomberg survey before the Energy Information Administration report. Crude and motor-fuel inventories are still at their highest seasonal levels in at least two decades.