The U.S. Energy Information Energy reported Wednesday that domestic oil inventories rose by 4.8 million barrels last week, adding to the oil glut and taking the market by surprise as analysts had been expecting a decrease.
Advertisement
“U.S. crude production shows no signs of faltering despite the low crude oil prices”.
“If we see a sell-the-fact reaction, which a lot of strategists are now looking for, we could see some pressure on the oil price easing in the overnight session”, McCarthy said. The news came just a day after government data showed a surprise addition for stockpiles last week, mounting evidence the global glut of crude is not easing.
West Texas Intermediate for January delivery, the front-month contract, was down 5 cents to $35.47 a barrel by 07.42 GMT after finishing down almost 5 per cent on Wednesday.
“The major driver this week has been USA dollar strength against a backdrop of ongoing refusal to respond rationally to the current market surplus on the supply side”, said Michael McCarthy, a chief markets strategist at CMC Markets in Sydney.
Higher rates in the USA support the currency and this makes oil as well as other commodities which trade in dollars more expensive which in turns undermines the demand.
A Reuters poll of analysts had forecast a 1.4 million-barrel draw instead.
In global benchmark Brent, the front-month January contract settled down $1.26, or 3.3 percent, at $37.19 a barrel before its expiry.
Crude oil futures fell Rs 18 to Rs 2,367 per barrel today as speculators trimmed their position amid a weak trend in the Asian markets.
“Being one of the world’s largest oil producers, the USA has till now not been allowed to export crude oil for 40 years”.
Futures held losses in NY after closing at the lowest price in nearly seven years, and are down 2.3 percent this week.
Advertisement
Gasoline futures recently rose 2.5% to $1.2639 a gallon.
