The Brent crude oil price was trading a little lower Thursday, following a report from the Energy Information Administration, that holdings of the commodity rose unexpectedly last week.
The EIA’s weekly report showed diomestic US crude oil inventories rose 586,000 in the week ended October 20th. According to a Reuters report, analysts had been expecting a 2.6 million decline.
While the increase was a surprise, it led only to a small decline in the price of oil. Around 1400 BST, Brent crude oil was trading at $58.40 per barrel. That’s down from $58.55 earlier in the week and not far off the recent September high of $59.49.
Other developments remain price supportive
A rise in US oil inventories is significant for the industry. However, a mix of other details continue to lend support to the oil price.
The ongoing Iraqi conflict around the strategically important city of Kirkuk has resulted in a lower amount of oil being exported from the region. While southern Iraqi oil installations have increased their output, it’s not enough to make up the shortfall from the northern region of the country.
In addition, Saudi Arabia’s energy minister, Khalid al-Falih’s recent visit to Iraq, to ensure OPEC’s two largest oil producers were on track to help end the oil glut and keep prices at a higher level, was also supportive.
“We are determined to do whatever it takes to bring global inventories down to the normal level which we say is the five-year average,” al-Falih told reporters.
OPEC agreement extension?
OPEC and some non-OPEC members, are currently operating under an agreement to cap daily production levels. That agreement has been largely adhered to and is a major reason behind the increase in the oil price.
The current agreement is due to end in March 2018. However, the expectation is that the current output cap could be extended to the end of 2018.
"We need to continue stabilizing the market," Saudi Arabian Crown Prince Mohammed bin Salman told Bloomberg in an interview, Thursday.
That comment comes just weeks after Russian president Vladimir Putin signalled his preference to continue managing prices closely.
The next OPEC meeting will take place next month.