Oil prices edged lower on Thursday after U.S. crude inventories rose sharply to their highest level since December 2017, adding to market worries about a possible global glut. Still, expectations that OPEC could trim output kept the decline in check.
The article was published on November 22, 2018. At 0141 GMT, U.S. West Texas Intermediate crude futures were trading at $53.38 a barrel, down 25 cents, or 0.5 percent, from the previous settlement. Brent crude futures for front-month delivery stood at $63.28 a barrel, off 20 cents, or 0.3 percent.
The Energy Information Administration said in its weekly report on Wednesday that U.S. commercial crude inventories increased by 4.9 million barrels to 446.91 million barrels last week. The agency also said U.S. crude production remained at a record 11.7 million barrels per day.
Stephen Innes, head of trading for Asia-Pacific at Oanda in Singapore, said the inventory figures continued to show “significant supply builds,” driven by sustained record U.S. crude output.
Analysts have warned that even with strong global production, oil markets have limited spare capacity to absorb unexpected disruptions. Innes argued that once U.S. pipeline bottlenecks are eased, which he expects in 2019, the case for tight global spare capacity will weaken.
Attention is now on OPEC, which is due to meet on Dec. 6 and is weighing supply cuts to counter the risk of oversupply. Some members, including Iran, are expected to resist voluntary reductions.
William O’Loughlin, an investment analyst at Australia’s Rivkin Securities, said there is talk that OPEC and Russia may again agree to a production cut, but not all parties may be able to reach consensus. He added that Saudi Arabia has hinted at a unilateral cut, though it will be cautious about upsetting the U.S., given President Trump’s repeated calls for lower oil prices.
On Wednesday, Trump praised Saudi Arabia over recent oil prices and urged further declines. In a tweet, he said: “Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy!... Thank you to Saudi Arabia, but let’s go lower!”
Reporting by Henning Gloystein; Editing by Joseph Radford
