Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil falls as big build in U.S. crude stockpiles raises spectre of supply glut

Published 18/11/2020, 01:53
Updated 18/11/2020, 01:55
© Reuters. FILE PHOTO: The sun sets behind a pump-jack outside Saint-Fiacre

© Reuters. FILE PHOTO: The sun sets behind a pump-jack outside Saint-Fiacre

By Yuka Obayashi

TOKYO (Reuters) - Oil prices fell on Wednesday after a bigger-than-expected build in U.S. crude stockpiles stoked fears for weak fuel demand and a potential supply glut, but hopes that OPEC and its allies will postpone a planned January increase to oil output braked losses.

Brent crude futures for January (LCOc1) dropped 14 cents, or 0.3%, to $43.61 a barrel by 0142 GMT having lost 0.2% on Tuesday. U.S. West Texas Intermediate crude for December (CLc1) slid 25 cents, or 0.6%, to $41.18 a barrel, reversing a 0.2% gain on Tuesday.

The American Petroleum Institute (API) said on Tuesday that U.S. crude inventories rose by 4.2 million barrels last week, well above analysts' expectations in a Reuters poll for a build of 1.7 million barrels.

"A higher build in U.S. crude stockpiles prompted selling as it fanned fears of slow recovery in fuel demand," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

"Still, hopes that OPEC+ will keep existing cuts further into 2021, or even increase the cuts, underpinned prices," he said. Kikukawa predicted WTI will stay boxed into a range of $39 and $44 a barrel until a full meeting of the Organization of the Petroleum Exporting Countries (OPEC) on Nov. 30.

To tackle weaker energy demand amid a new wave of the COVID-19 pandemic, Saudi Arabia called on fellow members of the OPEC+ grouping - OPEC and other producers including Russia - to be flexible in responding to oil market needs as it builds the case for a tighter production policy in 2021.

OPEC+ held a ministerial committee meeting on Tuesday that made no formal recommendation.

OPEC+ members are leaning towards delaying a previously agreed plan to boost output by 2 million barrels per day (bpd), or 2% of global demand, in January in an effort to support the market, sources told Reuters early this week.

© Reuters. FILE PHOTO: The sun sets behind a pump-jack outside Saint-Fiacre

Supporting the case for a tighter supply policy next year, OPEC and its allies have revised oil demand scenarios for 2021 with demand seen weaker than previously anticipated, a confidential document seen by Reuters shows.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.