(Updates prices, adds U.S. reserves sales proposed for
2018-2025)
By Dmitry Zhdannikov
LONDON, Oct 27 (Reuters) - Oil prices fell on Tuesday,
extending losses into a third week, on worries over a supply
glut and with U.S. inventory data expected to show another
increase in crude stocks.
Brent LCOc1 for December delivery had fallen 30 cents to
$47.24 a barrel by 1150 GMT, after settling the previous session
down 45 cents.
U.S. crude CLc1 dropped 55 cents to $43.43 a barrel,
having touched a nine-week low of $43.20 earlier on Tuesday.
An expected further build in U.S. crude stocks and a glut of
refined products again raised concerns of an oversupplied
market.
"We expect that the focus of the oil markets is rapidly
shifting to the surplus of refined products," analysts at
Jefferies wrote, adding that the bearish mood was aggravated by
dropping refining profitability while demand growth slowed.
U.S. production cuts - from a peak of around 9.6 million
barrels a day to around 9.1 million - and optimism over demand
have failed to translate into higher prices, said Ric Spooner,
chief market analyst at Sydney's CMC Markets.
U.S. commercial crude stockpiles are expected to have risen
for a fifth straight week, by an average of 3 million barrels to
479.6 million, in the week ended Oct. 23, a Reuters survey
showed. urn:newsml:reuters.com:*:nL1N12Q1P7
While stocks of distillates, which include diesel and jet
fuel, were seen falling by 2 million barrels, storage
utilisation for distillates in the United States and Europe is
nearing historic highs, Goldman Sachs (N:GS) said on Monday.
urn:newsml:reuters.com:*:nL3N12Q256 EIA/S
Also weighing on prices was news that U.S. congressional
leaders had proposed to sell 58 million barrels of oil from U.S.
emergency reserves to help pay for a budget deal, although the
sales would happen only between fiscal years 2018 and 2025.
urn:newsml:reuters.com:*:nL1N12R0SZ
Longer-term, non-OPEC supply could fall next year for the
first time since 2008 as deep cuts in capital expenditure by
publicly traded companies lead to a 700,000 barrels-per-day fall
in production to 52.7 million bpd, Jefferies added.
Analysts from the Energy Aspects think-tank added that some
5 million bpd of projects, which were meant to be completed from
2017-19, had been delayed or cancelled: "All of this will start
to show up in steep declines in 2017 supplies."
Investors await the outcomes of key policy talks this week,
including a U.S. Federal Reserve meeting that starts later on
Tuesday and China's fifth plenum, a meeting of the Communist
Party's central committee, that began on Monday.
Oil prices could get support from short-covering if
investors think the Fed will take a dovish view towards interest
rates at its meeting, Spooner said.
"The Fed and a weaker dollar could save the day, as could
improved supply statistics. That could still mean that this
downswing might turn out to be a correction of the latest rally,
not the beginning of a major move lower," Spooner said in a blog
post.
China's plenum is expected to set a 7 percent annual growth
target in its 13th five-year plan, a blueprint for economic and
social development between 2016 and 2020. urn:newsml:reuters.com:*:nL3N1281SO
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Chart on Brent oil: http://graphics.thomsonreuters.com/US/2/PVB_20152710090518.png
Chart on U.S. oil: http://graphics.thomsonreuters.com/US/2/PVB_20152710085606.png
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