(RTTNews) – Crude oil fell on Thursday as traders’ concerns grew about surplus oil flooding the market.
WTI crude oil for December delivery was last seen trading at $59.39 a barrel, down $0.21 (or 0.35%).
Data released by the American Petroleum Institute on Tuesday showed that US crude oil inventories increased by 6.5 million barrels for the week ended October 31 after falling by 4 million barrels in the previous week.
Meanwhile, data released by the US Energy Information Administration said crude oil inventories rose by 5.202 million barrels for the week ended October 31.
The report further said gasoline stockpiles fell by 4.7 million barrels last week, while distillate fuel stockpiles (which include heating oil and diesel) fell by 0.6 million barrels.
In its latest weekly petroleum situation report, the EIA said that at 421.2 million barrels, US crude oil inventories are about 4% below the five-year average for this time of year.
The EIA’s next weekly petroleum situation report is scheduled to be released on November 13, which will include data for the week ending November 7.
Libya has announced plans to increase output to 1.6 million barrels per day next year and 2 million bpd within five years, putting pressure on oil prices due to supply concerns.
On Sunday, citing “seasonality”, the OPEC+ alliance announced they would add another 137,000 barrels per day in December, but would hold off on any increases for the upcoming January, February and March months.
Entering day number 37, the US government shutdown has now gone down in history as the country’s longest shutdown.
A shutdown could significantly slow the economy and reduce oil and energy consumption and cause oil prices to decline. Traders are concerned about this downside risk.
Last Thursday, the US and China agreed to lift tariffs on each other and ease export-related restrictions, reducing the threat of a trade war. The demand for oil is expected to increase due to increase in bilateral trade between the world’s major economic companies.
Yesterday, the US Supreme Court began hearing a case testing the legality of US President Donald Trump’s imposition of tariffs.
During the hearing, the judges raised questions about the President’s powers to impose tariffs unilaterally. The outcome of this case could impact world trade as well as oil prices in the long term.
Analysts are also analyzing a recent report from The New York Times which said that the Trump administration is considering possible military strikes against Venezuela and seizing Venezuelan oil fields, although Trump remains undecided on the matter.
According to the EIA, Venezuela has the largest proven oil reserves, estimated at 303 billion barrels.
US sanctions on major Russian oil producers, Rosneft and Lukoil, are beginning to irritate Russia. Rosneft and Lukoil produce about 50% of total Russian oil production.
China buys about 2 million barrels of Russian oil per day, while India takes 1.5 million barrels per day. Now both these countries are looking for alternative suppliers.
Last week, US Federal Reserve Chairman Jerome Powell advised against treating a rate cut in December as a foregone conclusion.
The low-interest environment encourages faster industrial activity and increased energy consumption which is a support for oil prices.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Reflect the views of.
