A day after the Energy Information Administration (EIA) released its inventory report showing a 3.59-million-barrel jump in U.S. crude oil stockpiles, oil prices are trading down well over 3%. At 10:39 a.m. on Thursday, Brent crude was trading down 3.18% at $78.60, pulling further from the $80 threshold. West Texas Intermediate (WTI) was trading down 3.43%, at $74.03, for a loss of $2.63 on the day. The EIA’s crude stockpile build was the highest since August. Data reports showing lower oil processing runs from Chinese refiners in October, month-on-month, have also reignited demand concerns, despite OPEC’s missive early this week that these concerns are overblown.
The market, for now, remains unconvinced on China, the world’s largest crude importer.
China demand concerns are compounded by weak economic data coming out of the U.S. and the European Union. On Wednesday, the EU slashed eurozone growth forecasts for 2023 from 0.8% (forecast) in September to 0.6%.
At the same time, markets saw industrial and manufacturing output lag in the U.S. for October, with another hike in jobless claims, as well. So far, an announcement coming out of Washington that sanctions will again be tightened on Iran has done nothing to buoy prices, with an ING analyst saying in a note on Thursday that “while sanctions have remained in place, the U.S. has not enforced them strongly, which has allowed Iranian oil exports to grow this year”, Barron’s reported. Oil prices are now the lowest they have been since July this year, despite OPEC+ production cuts, which are now believed likely to extend into at least the first quarter of 2024, and perhaps the first half. Analysts now believe there are no conditions in place for Saudi Arabia to move to reverse its voluntary cuts. On November 26, OPEC+ will hold another ministerial meeting.
By Tom Kool for Oilprice.com
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