Oil Prices Sink on Rise in US Crude Inventories, Production

By Adedapo Adesanya

Oil prices tumbled by almost 2 per cent on Wednesday on a bigger-than-expected rise in crude inventories and record production in the world’s biggest producer, the United States, along with mounting worries about demand in Asia.

Brent futures lost $1.29 or 1.6 per cent to trade at $81.18 a barrel and the US West Texas Intermediate crude (WTI) fell by $1.60 or 2 per cent to finish at $76.66 per barrel.

US crude stocks rose by 3.6 million barrels last week to 421.9 million barrels, according to the U.S. Energy Information Administration (EIA).

The weekly government data, which was not published last week due to a systems upgrade, also showed US crude production was held at a record 13.2 million barrels per day that it hit in October.

In its latest weekly inventory report before the weekly pause, the EIA had estimated a modest crude oil inventory build of less than 1 million barrels.

Oil prices meanwhile have stabilised as concern about Middle East supply disruption dissipated and so did fears of a major economic slowdown.

The latest US inflation data contributed to the latter, with the October figure marking the first decline in four months, to 3.2 per cent.

The International Energy Agency (IEA) wants to quench supply concerns by saying that the oil market will be less tight than earlier feared in the fourth quarter thanks to higher global production.

The IEA also had tome bullish news for oil demand in its latest Oil Market Report, saying it will grow both this year and next despite broadly slower economic growth.

Meanwhile, top oil exporters Saudi Arabia and Russia, part of the Organization of the Petroleum Exporting Countries and allies, known as OPEC+ said this month they would continue with their additional voluntary oil output cuts until year-end.

The IEA joined OPEC in raising oil demand growth forecasts for this year, despite projections of slower economic growth in many major countries.

Also, oil refinery in the world’s largest importer throughput eased in October from the previous month’s highs as industrial fuel demand weakened and refining margins narrowed.

Still, its economic activity rose in October as industrial output increased at a faster pace and retail sales growth beat expectations.

The European Union said Russian oil tankers are not targeted in the European Commission’s proposal for tightening implementation of a price cap on the country’s crude oil.