Oil Rally Halts as More Output Seen; U.S. Stockpile Data Awaited -Breaking
By Barani Krishnan
Investing.com – Oil prices aren’t ready to collapse yet in the same fashion they rose. Yet, new highs aren’t happening in a market seeing steady drops or slower advances each day, especially after a forecast Tuesday that world output may actually rise in the near-term — something few expected.
Paris-based International Energy Agency or IEA said last month that the global production increased by 1.4million barrels per hour and would increase as soon as supplies are restored by the U.S. Gulf of Mexico.
The higher oil prices are a boon for American shale drilling companies. The agency stated that the OPEC+ alliance is continuing to restart exports, which it had halted in the aftermath of the pandemic. Separately, the number of rigs actively drilling for oil in the United States rose by 60 — from a low of 394 to 454 — over the past 11 weeks.
The benchmark crude oil price in the United States, WTI, fell 12 cents or 0.2% to $80.76 per barrel. WTI has lost 4% the past three week after seeing a 30% increase over the seven previous months. U.S. crude benchmark reached seven-year highs of $85 in October and continues to rise 64% over the previous year.
Oil benchmark London-traded crude was up 0.5% to $82.43. Brent, like WTI lost 4% during the previous three weeks. Global benchmark Brent reached a record-breaking $86 for three years and is still up 59% year to date.
Tuesday’s mixed close in oil came ahead of a weekly snapshot on U.S. crude, gasoline and distillate stockpiles due from the American Petroleum Institute. After market settlement, API numbers (20:30 GMT) are published each Tuesday. They serve as a preview for official weekly inventory data, due Wednesdays from the EIA (or U.S Energy Information Administration).
Analysts tracked by Investing.com have forecast that U.S. rose by 1.4 million barrels for the week ended Nov. 12, adding to the previous week’s gain of 1.0 million.
According to forecasts, inventories will likely fall by 575,000 barrels. This is in addition of the drop of 1.56million the week prior.
Stockpiles of , which include diesel and , are expected to have fallen by 1.23 million barrels, after the previous week’s drop of 2.61 million.
Between mid-March and end-October, oil rallied without interruptions, adding about $20 a barrel as OPEC, the producer group, and its allies, continued to block the supply market amid soaring energy demand from countries recovering from the Covid-19 pandemic.
Oil bulls had delighted then in OPEC+’s continuous rebuffing of the administration’s plea for more oil above the miserly 400,000 barrels per day addition offered by the alliance.
Three weeks ago, the music of oil longs stopped as the Biden administration declared that it would do everything necessary to prevent runaway inflation and, in particular, to stop U.S. growth.
The administration’s caution took on an added tone of gravity after the Labor Department reported last week that the U.S. Consumer Price Index, which represents a basket of products ranging from gasoline and health care to groceries and rents, rose 6.2% during the year to October. The acceleration was mainly driven by gasoline prices that reached seven-year highs.