By Annika Breidthardt
Price of oil falls to $84.98 a barrel on positive US crude stocks outlook and Opec supply boost.
Oil retreated for the fourth consecutive session on Wednesday on forecasts that US crude stocks likely rose again and on signs that Opec was already boosting oil supply.
US light crude for December delivery fell 29 cents to $84.98 a barrel at 0724 GMT, around 90 cents lower than around the same time a day earlier. Oil has fallen more than $5.00 since hitting a record high of $90.07 last week. London Brent crude fell 22 cents to $82.63 a barrel.
"Overall the market still looks strong but it may have got ahead of itself a little last week," said Tony Nunan, risk manager for Mitsubishi in Tokyo.
"It all depends on US inventories now. In the fourth quarter, we could go up to $105 a barrel or down to $70. All seems possible," he added.
A Reuters poll predicted that US crude and gasoline stocks each rose by 800,000 barrels last week.
Distillate stocks were probably little changed, the poll showed, after rising by one million barrels in the week ended October 12, easing concerns of a shortfall in the US ahead of winter that had fuelled oil's rally in recent months.
"The situation this week is different from last week. The market is already trending lower and people see the risk more of more inventories than of less inventories," said Tobin Gorey, a commodities strategist at Australia's Commonwealth Bank.
Opec agreed to increase oil output from November but the Petrologistics consultancy, which tracks tanker movements, said on Tuesday it was already raising oil supply in October response to record prices.
Asked in Beijing if Opec had already started increasing production by half a million barrels per day (bpd) from this month, Opec Secretary-Genaral Abdullah Al-Badri would only say: "We are implementing our decision we took in September, at the last conference, that are we going to increase production by 500,000 bpd from November 1."
Giving some support, Mexico shut its main oil exporting ports due to bad weather on Tuesday, shutting off the bulk of the country's crude shipments to the US.
Former US Federal Reserve Chairman Alan Greenspan said on Tuesday the US economy would likely not slip into recession even though it still faces pressure from a drawn-out housing-market slowdown.
However, the confidence of American consumers fell to a six-week low in the latest week as higher gasoline prices and credit concerns continue to erode the economic outlook, a poll showed, raising concerns that oil demand could be hit.
Worries that a US housing slump could drag the economy into recession have weighed on oil prices. But oil has gained about 40% this year on fears of a supply shortfall in the northern hemisphere's winter season and on tensions in the Middle East.
But in a sign that tensions between Iraq and Turkey could be contained, Iraq promised Turkey it would close the offices of Kurdish rebels and work to prevent them launching attacks on Turkey. - Reuters