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Oil fell after a surprisingly large increase in US inventories, while another tweet from Donald Trump calling for lower prices suggested OPEC may reconsider plans to cut production.
Futures fell as much as 2% in New York after Wednesday’s 2.3% jump pared some of the losses from a rout earlier this week. America’s crude inventories rose for a ninth straight week, the longest run of gains since March 2017, according to government data on Wednesday. Meanwhile, President Trump thanked Saudi Arabia for lower oil prices in his tweet, adding “let’s go lower!”
Crude entered a bear market this month on concern a supply glut may emerge. While traders expect Iranian oil to flow back into the market under America’s temporary waivers to some nations, the Organization of Petroleum Exporting Countries and its allies will seek ways to reach a balance when they meet next month. All options are on the table for the group’s talks, ranging from no cuts to a joint reduction of 1.4 million barrels a day, according to Citigroup.
“The bears still have the oil market firmly in their grip,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “An unexpectedly pronounced rise in US crude-oil stocks generated renewed selling pressure. No end to the downswing is in sight for the foreseeable future.”
West Texas Intermediate for January delivery lost as much as $1.11 to $53.52 a barrel on the New York Mercantile Exchange, and was at $53.95 as of 10:47 London time. Total volume traded was in line with the 100-day average. There’ll be no settlement on Thursday due to the US Thanksgiving holiday.
WTI rose $1.20 on Wednesday, after plunging 6.6% in the previous session.
Brent for January settlement dropped 53 cents to $62.95 a barrel on the London-based ICE Futures Europe exchange, after settling up 1.5% on Wednesday. The global benchmark crude traded at an $8.97 premium to WTI.
In the US, nationwide inventories rose by 4.85 million barrels last week to about 447 million barrels, according to Energy Information Administration data. That’s more than the 3.45 million-barrel gain expected in a Bloomberg survey. Still, it’s about half the increase of the prior week, and gasoline and distillate stockpiles declined, suggesting demand for petroleum remains resilient.
Trump said earlier he won’t let the killing of US-based journalist Jamal Khashoggi jeopardize America’s relations with Saudi Arabia as oil prices may “go through the roof.” His tweet came after the kingdom’s crude output was said to surge to a record near 11 million barrels a day this month, following stronger-than-usual demand from customers preparing for a disruption in Iranian supplies.
Other oil-market news: The Cboe/Nymex Oil Volatility Index slipped 9.5% on Wednesday, after surging 35% in the previous session. Americans hitting the road for Thanksgiving can expect to pay the highest holiday pump prices in four years. The US Department of Justice is formally reviewing antitrust legislation aimed at reining in OPEC’s power over oil markets, according to a department official.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
