US oil stockpiles have climbed for seven straight weeks to near-record highs, and analysts expect weekly inventory data due Wednesday to show that supplies rose by 2 million barrels last week.
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Oil prices clinch to yesterday’s gains and now look forward to the upcoming crude reserves report from API for further cues on the supply scenario.
The oil market has been pricing crude for future delivery at much higher rates as traders keep millions of barrels in storage with the hope of making more money in later sales.
Official inventory data from the USA government’s Energy Information Administration is due on Wednesday.
On a weekly basis, US oil output remained at 9.2 million bpd for a second week in a row after holding at 9.1 million bpd for eight consecutive weeks since the start of September, according to EIA’s weekly field production report.
On the NY Mercantile Exchange (NYMEX), prices of West Texas Intermediate (WTI) crude oil futures for December’s delivery increased by 99 cents to $41.73 per barrel in the Globex electronic session. Crude oil prices sank to a four-month low of $40.06 a barrel this week and they’re down 12% in November alone.
BMI Research said the geopolitical tensions sparked by the escalation of military action against IS following the Paris attacks is unlikely to be a major influence on oil prices.
“We estimate crude oil production from USA shale fields will fall just 2.5 percent (in Q4)”, the bank said, adding that this was a result of falling shale production costs and healthy refined oil product sales.
Internationally-traded Brent crude futures were at US$44.50 a barrel, up 36 cents.
Moderate autumn temperatures in the United States have raised expectations for another increase in USA commercial crude stockpiles in the country this week, keeping the downward pressure on prices.
That’s comparable to a months’ worth of global oil consumption.
Distillate inventories decreased by 800,000 barrels last week and remain in the middle of the average range for this time of year.
“Today, traders are realizing that fundamentally nothing has changed”, said Gain Capital analyst Fawad Razaqzada.
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Oil prices have dropped more than 60 percent since June previous year as high production has coincided with an economic slowdown in Asia, particularly in China but also Japan, which slipped back into recession in the third quarter.
