Oil Prices Expand Slide as US Supplies Surge
Oil price extended one month's long slide Wednesday after a report showed that crude oil products in the US rose for a seventh straight week and US oil production stood at a record.
Light, sweet crude for delivery in December was 0.4% lower at $ 61.97 per barrel on the New York Mercantile Exchange. Brent crude, the global benchmark index, fell 0.2% to $ 71.96 per barrel.
The US reference level fell as low as $ 61.20 per barrel intraday Wednesday and put it on a bear market, which is generally defined as a 20% decline from the last peak. Prices must break below $ 61.13 per barrel to enter a bear market.
The Energy Information Administration said Wednesday that the crude oil inventory in the US increased by 5.8 million barrels last year to 432 million barrels, the highest sum since the beginning of June. The report also said that US oil production exploded at a record of 1[ads1]1.6 million barrels a day last week, from 11.2 million barrels a day a week earlier.
"A much larger than expected commodity building on the heels with higher imports and increase in US oil production to a new record lifted total US petroleum inventories 4.6 million after two weeks of pulls," said Kyle Cooper, consultant at ION Energy. "Overall, the report was considered to be quite bearish. "
Wednesday's decline adds sharp losses that began in early October, including decline over the past seven seasons, eventually matching the longest tapestry since March 2017.
Stewart Glickman Energy Research Scientist at CFRA Research in New York said markets earlier this year saw new US sanctions against Iran, which prohibits countries from buying Iranian oil as a factor that will provide lasting support for higher oil prices since it would tighten global supplies.
Saudi Arabia-de facto leader of OPEC could call for renewed supply cuts when the cartel and its production congresses meet on sunday.
Photo:
Omar Marques / Zuma Press
However, the Trump administration recently began issuing exemptions to eight countries for six months, including China and India, which has led to oil prices falling in recent days.
"We think there may be politics at work here, and with the mid-term decision reached, we would not be surprised to see that the administration is taking a more difficult line again," says Mr. Glickman. "Another OPEC meeting awaits this later month, and Saudi Arabia are apparently interested in discussing supply cuts again, which would (if used) also generate some upward pressure on crude oil. "
The meeting with members and allies in the Organization for Petroleum Exporting Countries is set to find Saudi Arabia has stated several times that they intend to maintain market stability, so the recent increase in oil inventories has triggered a supply section on the agenda of the meeting, "said Giovanni Staunovo, commercial analyst by UBS Wealth Management.
Among refined products, petrol futures fell for December delivery 2% to $ 1,6609 per gallon. Diesel futures increased 2% to $ 2.2315 a gallon.
-Christopher Alessi contributed to this article.
Write to Dan Molinski at Dan.Molinski@wsj.com
