Oil Price Touches 3-week Low At $49.98 Over Rising Anxieties

Oil prices plummeted to their lowest level in about three weeks on Wednesday, October 26, pressured by growing skepticisms over the success of OPEC’s plan to curb production, Market Watch reports.

December Brent crude LCOZ6, -1.65% on London’s ICE Futures exchange fell 81 cents, or 1.6%, to $49.98 a barrel, settling under $50 for the first time this month.

December U.S West Texas Intermediate crude CLZ6, +0.10% fell by 78 cents, or 1.6%, to settle at $49.18 a barrel. That marked the lowest finish since Oct. 4, according to FactSet data. Still, prices had been trading even lower, at $48.90, shortly before the supply report.

The pessimism outweighed earlier support U.S. government data showing a surprise weekly drawdown in crude stockpiles.

“Oil prices shrugged off the minor, yet unexpected, draw to [U.S. crude] stocks,” as the market continued to “come to terms with the growing unlikelihood” of an agreement by the Organization of the Petroleum Exporting Countries to cut production a month from now, said Troy Vincent, an oil analyst at ClipperData. OPEC members are set to hold a formal meeting Nov. 30.

The U.S. Energy Information Administration early Wednesday reported that domestic crude supplies fell by 600,000 barrels in the week ended Oct. 21. Analysts polled by S&P Global Platts expected a 400,000-barrel climb, while the American Petroleum Institute late Tuesday reported a hefty rise of 4.8 million barrels.

Matt Smith, director of commodity research at ClipperData, attributed the “minor crude draw” to “ongoing lower imports, in combination with a tick higher in refinery runs.”

Implied demand for both gasoline and distillates also saw a rebound after last week’s low level, while “increasing refinery runs as we exit maintenance season were not enough to replenish product stocks,” he said.

Total petroleum products supplied over the last four-week period, which is a proxy for demand, was up 4.3% from the same period a year earlier, the EIA said. Crude imports inched up by 109,000 barrels a day from the previous week, while crude-oil refinery inputs climbed by 182,000 barrels a day from a week earlier.

Gasoline supplies declined by 2 million barrels and distillate stockpiles dropped 3.4 million barrels, according to the EIA.

On Nymex, November gasoline RBX6, +0.48% fell by 1.7 cents, or 1.2%, to $1.483 a gallon, while November heating oil RBX6, +0.48% shed 1.2 cents, or 0.8%, to $1.551 a gallon.

The EIA report also showed a climb of 40,000 barrels a day in total domestic crude production to 8.504 million barrels a day.

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here