NEW YORK, Nov. 16 (UPI) — With some contracts expiring, crude oil prices gave back some of the recent gains after industry data show the U.S. market still favors the supply side.
Crude oil posted one of the largest gains in recent years Tuesday ahead of the expiration of the December contract for Brent crude oil, claims of an attack on an oil pipeline in Nigeria and renewed prospects that members of the Organization of Petroleum Exporting Countries would cut a deal on production levels by the end of the month.
Some OPEC members are pressing for a ceiling on production in an effort to pull markets back toward balance. Coordinating across all 14 members, however, could present obstacles and a report Wednesday from Bloomberg News said Iran and Iraq won’t be sending top-level ministers to the next round of talks in Doha.
“Freeze diplomacy continues in full swing and we think that Saudi Arabia wants to make sure that everything is done before the [formal] Nov. 30th meeting,” Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said in a research note published Wednesday.
The price for Brent crude oil, now in the January contract, was down 0.6 percent to start the trading day at $46.66 per barrel. West Texas Intermediate, the U.S. benchmark price still trading in December, was off 0.7 percent from the previous close to $45.46 per barrel.
The American Petroleum Institute reported a build in U.S. oil inventories of around 3.6 million barrels, which included a 1.1 million-barrel build at the key oil storage hub in Cushing, Okla. According to Jakob, the build in stockpiles in Cushing was higher than expected.
Formal data from the U.S. Energy Information Administration is published early Wednesday morning and that could push oil prices lower if its data confirms the build reported by the API.
Elsewhere, the International Energy Agency published its outlook for the global energy sector Wednesday, showing resources like natural gas, wind and solar power are replacing coal. Oil still dominates the energy landscape in the medium term, however.
“We are entering a period of greater oil price volatility,” IEA Executive Director Fatih Birol said in a statement. “If oil prices rise in the short term, then shale producers can react quite quickly to put more oil on the market, producing a see-saw movement. And if we continue to see subdued investments in new conventional oil projects, this could have profound consequences in the longer term.”
According to the IEA, global oil demand will peak no earlier than 2040.
