US Crude inventories pressure Oil prices lower , but a supportive OPEC supply cut looms

U.S. West Texas Intermediate (WTI) crude futures, were at $53.71 per barrel at 0051 GMT, 8 cents above their last settlement.

Front-month Brent crude oil futures had yet to trade.

U.S. commercial crude oil inventories rose by 4.9 million barrels to 446.91 million barrels last week, the Energy Information Administration (EIA) said in a weekly report on Wednesday. That was the highest level since December 2017.

U.S. crude oil production remained at a record 11.7 million barrels per day (bpd), the EIA said.

“U.S. inventory data … continued to show significant supply builds, which comes on the back of sustained record U.S. crude oil production,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

Some analysts have warned that despite high global production, oil markets have little spare capacity to handle unforeseen supply disruptions.

However, Innes said that once U.S. pipeline bottlenecks were alleviated, which he said he expected in 2019, “the entire notion of a tight global spare capacity argument goes down the well”.

Fearing a glut, the Middle East dominated producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) is considering supply cuts when it next meets on Dec. 6, although some members like Iran are expected to resist any voluntary reductions.

Reuters

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes