Oil prices experienced a decline on Thursday due to several factors. Firstly, U.S. crude oil inventories surpassed expectations by rising, while output in the United States, the world’s largest oil producer, reached a record high. Brent crude futures dropped by 97 cents, settling at $81.47 per barrel, while U.S. West Texas Intermediate crude fell by $1.31, reaching $76.94.
The U.S. Energy Information Administration reported that crude oil inventories increased by 3.6 million barrels last week, reaching a total of 421.9 million barrels. This figure significantly exceeded the forecast of analysts surveyed by Reuters, who had estimated a rise of 1.8 million barrels. Concurrently, U.S. domestic crude production remained at a record level of 13.2 million barrels per day (bpd).
Despite expectations of slower economic growth in many major nations, the International Energy Agency (IEA), along with the Organization of the Petroleum Exporting Countries and its allies (OPEC+), raised their oil demand growth projections for the year.
Oil prices rebounded after an OPEC report on Tuesday, which emphasized the robustness of market fundamentals and raised concerns of a potential disruption in supply due to the United States’ restrictions on Russian oil exports. As a result, Brent crude futures increased by 33 cents, or 0.4 percent, to $82.85 per barrel, and U.S. West Texas Intermediate crude futures also rose by 33 cents, or 0.4 percent, to $78.59 per barrel.
Read more: OPEC’s boosted global demand forecasts dampen concerns, fuel oil price surge
In its monthly report, OPEC attributed the recent price decline to speculators and made a slight upward adjustment to its global oil demand growth forecast for 2023 while maintaining a relatively high forecast for 2024.
Lowest level
Last week, oil prices reached their lowest level since July, driven by concerns of declining demand in the U.S. and China, the world’s largest oil consumers. China’s consumer price index experienced a decline in October, reaching levels not seen since the COVID-19 pandemic, and its exports for that month contracted more than anticipated.
Saudi’s supply cuts
In a related development, Amrita Sen, co-founder of consultancy Energy Aspects said on Wednesday the world’s top oil exporter, Saudi Arabia, is expected to extend its additional voluntary supply cuts to at least the first quarter, if not the first half of 2024.
On November 26, the upcoming ministerial meeting of OPEC+ is scheduled to take place, aiming to address and deliberate upon the market outlook.
For more news on markets, click here.
