Oil prices retreated on Monday, failing to hold on to gains won earlier in the day on geopolitical tensions sparked by the deadly terror attacks in Paris.
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Two separate reports on USA crude inventory levels are due this week, with the first later on Tuesday. The nation’s crude stockpiles remain more than 100 million barrels above the five-year seasonal average after inventories rose for a seventh week through November 6, according to data from the EIA.
The U.S. Energy Information Administration said crude inventories grew by 252,000 barrels last week, versus the near 2 million-barrel build forecast by analysts in a Reuters poll.
Crude stocks in the US inched up higher last week despite imports dropping. Crude futures in the USA were up 75 cents to $41.41 per barrel. Brent crude futures were down 19 cents at $43.38 per barrel.
Pressure is growing on OPEC members as the average price that their oil fetches falls to $US38.29 a barrel. The contract lost $1.01, or 2.4%, to $40.74 on Friday, the lowest close since August 26.
USA crude’s West Texas Intermediate (WTI) futures were down 50 cents at $40.17 a barrel by 12:52 p.m. EST (1752 GMT) after hitting a session low of $39.91.
“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.
Research analyst Daniel Ang of Phillips Future’s believes that after the Paris attack and France’s retaliation with air strikes on Syria, the risk premium on oil is expected to increase.
The worldwide Energy Agency (IEA) also said that oil stocks from countries in the Organization for Economic Cooperation and Development stood at a record near 3 billion barrels by the end of September.
Last week, oil prices saw tremendous pressure because of massive stockpiles on land and at sea.
Oil ministers from OPEC claim they need at least until next month to decide if this rebound is for real, or simply a temporary phenomenon.
Most open interest in options expiring in December is clustered around put options – which give the holder the right, but not the obligation, to sell Brent futures – at $40 a barrel.
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China’s slowing economy has also impacted other commodities, including copper, which dropped to a near six-year low on Wednesday.
