Oil futures declined Wednesday, looking to tally back-to-back session losses with prices holding ground at their lowest in more than three months on worries over the outlook for demand and a reported weekly rise in U.S. supplies of nearly 12 million barrels.
Price action
-
West Texas Intermediate crude
CL00,
-1.03%
for December delivery
CL.1,
-1.03% CLZ23,
-1.03%
fell 43 cents, or 0.6%, to $76.94 a barrel on the New York Mercantile Exchange. -
January Brent crude
BRN00,
-0.86% BRNF24,
-0.86% ,
the global benchmark, dropped 53 cents, or 0.7%, to $81.08 a barrel on ICE Futures Europe. -
Back on Nymex, December gasoline
RBZ23,
-0.05%
added 0.2% to $2.1719 a gallon, while December heating oil
HOZ23,
-0.92%
was down 1% to $2.8105 a gallon. -
December natural gas
NGZ23,
+0.35%
rose 0.5% to $3.156 a gallon.
Market drivers
The American Petroleum Institute, a trade group, reported late Tuesday that U.S. crude supplies for the week ending Nov. 3 climbed by 11.9 million barrels, according to sources citing the data.
“That jump is likely to reinforce concerns around demand headwinds that could force supply/demand balances back into surplus, particularly as seasonal demand nears its low point for the year,” said Robbie Fraser, manager of Global Research & Analytics at Schneider Electric, in a daily note.
Weekly petroleum-supply data from the Energy Information Administration has been delayed to next week due to a “planned systems upgrade.” The government agency will report two weeks’ worth of data on Nov. 15. Analysts at Macquarie forecast a 4.7 million-barrel rise in crude stockpiles for the week ending Nov. 3.
Crude-oil prices fell sharply Tuesday, with both WTI and Brent ending at their lowest since July 21 after a round of disappointing China economic data that raised questions about demand from the world’s largest oil consumer.
See: Why oil prices just dropped to their lowest since July
It feels as if “the path of least resistance is down, with the next support for the front-month WTI contract coming in around $75 per barrel,” David Morrison, senior market analyst at Trade Nation, said in a note.
“Having said that, oil is looking oversold at current levels, so the possibility of a bounce can’t be ruled out. Demand issues continue to be the driver of price, with concerns about economic weakness across China, the Eurozone and possibly the U.S. as well, all adding to downside pressure,” he wrote.
It isn’t all about demand. Supply concerns have also played a role as fears of a broadening of the Israel-Hamas war have faded, allowing crude to more than take back the risk premium built into prices after the Oct. 7 Hamas attack on Israel.
Russian seaborne crude oil exports have grown in recent months, which suggests that Russia is not sticking to its additional voluntary cut, said Warren Patterson and Ewa Manthey, commodity strategists at ING, in a note.
The weakness is “likely to lead to growing noise from OPEC+ and in particular from Saudi Arabia,” they said.
While Saudi Arabia and Russia confirmed that they would continue with their additional voluntary cuts through until the end of the year, “it is increasingly likely that they will extend this into the new year if this downward pressure continues,” Patterson and Manthey wrote.
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