Crude Oil Prices Tumble on Rise in US Inventory
By Adedapo Adesanya
Prices of crude oil slipped on Wednesday, December 11, after the Energy Information Administration (EIA) released a report that showed that the United States crude oil inventory surprisingly increased for the week ended December 6.
Brent crude, the global benchmark, dropped 51 cents or 0.79 percent to trade at $63.83 per barrel, while the US benchmark, West Texas Intermediate (WTI) crude, fell by 40 cents equivalent to 0.68 percent to sell at $58.54 per barrel at the market yesterday.
The increase in US crude inventory extended by 822,000 barrels. This beat expectations for a 2.8 million-barrel drop. This means that at 447.9 million barrels, crude stocks were about 4 percent above the five-year average for this time of year, the EIA said.
Business Post reported yesterday that the trade tension between the United States and China continue and this could affect the outlook for demand with December 15 deadline set for the next round of US tariffs on Chinese imports.
The 17-month long dispute between both countries have affected oil demand and despite the decision by Organisation of the Petroleum Exporting Countries (OPEC) and allied oil producers led by Russia to deepen supply cuts to 1.7 million barrels per day have not helped prices.
Concerns that the trade war will slow demand for oil have continued and in a monthly report issued on Wednesday, OPEC left its expectations for world oil demand growth at 0.98 million barrels per day, unchanged from its previous report for 2019 and at 1.08 million barrels a day for 2020.
The report also forecast that non-OPEC oil supply growth would be 1.82 million barrels per day, also unchanged from last month’s report.
With the United Kingdom elections and the US and European Central Banks meeting scheduled to hold on Thursday, oil prices are expected to pull a recovery as investors will be looking at events that could spur the growth of the black gold.