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By Irina Slav – Nov 28, 2018, 9:40 AM CST
Crude oil prices fell further today after the Energy Information Administration announced that crude oil inventories for the week prior to November 23 had added 3.6 million barrels. This is comparable to a production of 4.9 million barrels a week earlier.
EIA figures came in after yesterday, the American Petroleum Institute announced an inventory increase estimated at 3,453 million barrels, which did not have a significant impact. significant impact on prices.
The EIA also said that gasoline inventories fell by 800,000 barrels last week and that stocks of distillate fuels had increased by 2.6 million barrels. A week earlier, the authority had estimated a drop of 1.3 million barrels of gasoline and a drop of 100,000 barrels of distillate fuel oil.
Meanwhile, production is reaching new heights and this trend is expected to continue, according to most estimates, unless oil prices fall at a rapid pace. The probability of this happening is, however, relatively low. The OPEC is meeting next week in Vienna to discuss a new round of production cuts and most badysts expect the cuts to be approved, with Russia joining again.
Morgan Stanley, for its part, believes that the cartel has a 33% chance of failing or refusing to agree on a reduction in production. In this case, prices will certainly fall further, under the pressure of a gloomy economic outlook and concerns over excess supply of crude oil. The argument against a reduction in production is quite simple: market share. It is not surprising that some OPEC members have already spoken out against a cut, especially in Libya, which said it hoped to benefit from an exemption from any cuts.
In addition to the OPEC meeting, oil market observers would follow the G20 meeting, during which Russia might or might not make it clear whether it would adhere to reduction agreements. Just like last time, Moscow would be a crucial ally for the cartel if it decided to join the cuts or a decisive blow if it decided to go unnoticed.
By Irina Slav for Oilprice.com
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