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US Inventories: On Wednesday, the US Energy Information Administration announced that crude oil inventories rose by 3.2 million barrels during the week ended Oct. 26, marking its sixth consecutive straight week. Prices had been under pressure after the American Petroleum Institute, an industrial group, published its own estimates of a construction of 5.7 million barrels. Analysts and operators surveyed by the Wall Street Journal forecast an average increase of 2.9 million barrels. At the same time, gasoline inventories fell by 3.2 million barrels and distillate inventories by 4.1 million barrels.
Global growth: Concerns about the weakening of global economic growth have weighed on equities in recent weeks, as crude has been affected by stock market volatility. Crude prices fell about 12% from the four-year highs reached in early October. Tuesday, West Texas Intermediate reached its lowest level since mid-August. The escalation of trade disputes between the United States and China remains a central concern, with President Trump threatening new tariffs in Beijing this week. "Such threats do not bode well for the health of the global economy and therefore for the prospects of oil demand," said Stephen Brennock, an analyst at PVM Oil Associates Ltd.
The US Energy Information Administration reported that crude oil inventories increased by 3.2 million barrels during the week ended Oct. 26.
Photo:
Yegor Aleyev / TASS / Zuma Press
US Dollars: A stronger dollar also put pressure on oil prices. The WSJ Dollar Index gained 0.1% to 90.91 and is up 5.7% year-on-year. Commodities denominated in dollars, such as crude oil, become more expensive for foreign investors as the US dollar strengthens.
INSIGHT
Actions: Analysts continue to link the performance of the oil and equity sectors, both of which are likely to break expectations for global growth. On Wednesday, the Dow Jones Industrial Average rose 1% and the S & P 500 2.1%. "I think the market will be very equity sensitive," said Kyle Cooper, a consultant at ION Energy. "If the stock does not find a bottom, you can certainly see" that the price of oil drops.
Speculative investors: "We are in the last day of October and trade has been marked by a considerable erosion of speculative prospects since the price of Brent reached $ 86 a barrel the first week of this month," wrote Wednesday in a statement. daily note analysts JBC Energy firm. "The net long positions on crude among the portfolio managers have decreased by 260,000 lots over the last four weeks," they added.
OPEC: All eyes are on Iran, a key member of the Organization of Petroleum Exporting Countries, and US sanctions on the oil industry in the Islamic Republic. Exports of Iranian crude have already fallen by about 800,000 barrels a day since President Trump withdrew the United States from a 2015 international agreement aimed at curbing Iran's nuclear program, paving the way for the re-imposition of sanctions. Oil market players are watching closely to see if Saudi Arabia – the de facto leader of OPEC – and its allies in production, including Russia, will be able to fill the gap left by the decline of the Iranian offer.
IN FRONT OF
- Royal Dutch Shell PLC publishes its quarterly results on Thursday.
Write to Christopher Alessi at [email protected] and Stephanie Yang at [email protected]
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