Brent crude futures were down nearly 2% by Thursday afternoon in New York after a cargo surveyor estimated oil shipments by OPEC will rise in the four weeks to mid-October from a month earlier.

U.S. crude’s West Texas Intermediate (WTI) futures also fell by almost 2% after a market intelligence firm estimated a large build this week in supplies at the Cushing storage hub for crude in Oklahoma.

Oil shipments by OPEC, or the Organization of the Petroleum Exporting Countries, are projected to rise to 23.96 million barrels per day in the four weeks to Oct. 14 versus the four weeks to Sept. 16, tanker-tracker Oil Movements said in its weekly report.

Since the start of 2017, the 14-member OPEC had joined Russia, the world’s No. 1 crude producer, to cumulatively cut 1.8 million bpd in supply through March 2018. While OPEC had fallen short of the target earlier, the group says it has delivered sharper-than-expected cuts lately, resulting in a 116%-compliance with export reduction quotas in August.

In the United States, market intelligence firm Genscape estimated crude stockpiles at the Cushing, Oklahoma hub rose by more than 2.7 million barrels in the week to Sept 26. Pipelines from Cushing run to key refineries in the U.S. Gulf Coast of Mexico and the hub is an important indicator of U.S. crude demand. In the previous week to Sept. 22, the U.S. government had reported a build of just 1.2 million barrels in Cushing.

By 12:49 p.m. ET, the front-month futures contract in Brent, the global benchmark for oil, was down $0.87, or 1.5%, at $57.03 per barrel. The session low was $56.85, marking a drop of $1.05 on the day. Brent’s front-month has lost nearly 4% in the past three sessions as traders and investors took profit on a runaway rally that propelled it to 26-month highs of $59.45 earlier this week.

The front-month contract in U.S. crude’s West Texas Intermediate (WTI) futures was down $0.81, or 1.6%, at $51.33 a barrel.

Earlier in the session, both Brent and WTI were up as much as 1%.

Brent rose after Turkish President Tayyip Erdogan warned he could use military force to prevent the formation of an independent state in Iraq’s Kurdistan region, which exports up to 550,000 barrels of oil per day. Meanwhile, in Baghdad, the office of Iraqi Prime Minister Haider al-Abadi said Turkey has assured it will deal only with the Iraqi government on crude exports, in an effort to close the Kurds’ oil tap. The hard-line stance by Turkey and Iraq came after Kurdistan voted overwhelmingly on Monday for freedom from Baghdad.

WTI extended gains briefly on U.S. government data from Wednesday showing an unexpected drop in domestic crude stockpiles for last week.

Analysts at Goldman Sachs said in a note WTI was likely to find strong support at $50 a barrel through early next year.

“While it is a far cry from a commodity upcycle, which might be a catalyst to cement a sustained rally in energy equities, it is a vastly improved outlook from this past summer, where many feared surging U.S. production would potentially create an extended period of sub-$50/bbl WTI oil,” Goldman’s analysts said.

For Brent, analysts at ING said the global oil benchmark was nearing a technical upper level trading range of $61.60, from where it was likely to see a correction.

“We do not expect a durable break above the upper end of this range within this rally. This would indicate the next selling opportunity and decline within the longer-term trading range is close at hand. Therefore, we recommend selling the rallies towards the $61.60 resistance barrier,” ING’s analysts said.

Notwithstanding its recent slide, Brent was still on track to 19% gain for the third quarter — its best quarter since 2004.


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