Oil price: WTI hits two-year low ahead of US stockpile data

on Oct 28, 2014
Updated: Oct 21, 2019

iNVEZZ.com, Tuesday, October 28: The price of WTI crude oil futures has been relatively unchanged so far in today’s trading after hitting a fresh two-year low in the previous session. Speculation that OPEC will not agree to reduce its production during its meeting next month along with expectations for further expansion in US crude inventories have kept oil prices under pressure.

December WTI futures were virtually flat, easing nine cents to $80.91 in electronic trading on the NYMEX in New York as of 09:27 GMT. The contract touched $79.44 yesterday, its lowest level since June 2012.
The American Petroleum Institute (API) trade body is due to release its weekly US stockpile data later today, while the more closely-watched inventory report from the US Energy Information Administration (EIA) will be released tomorrow. According to a Bloomberg News survey, last week crude inventories expanded by 3.8 million barrels to 381.5 million.

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Brent crude for December delivery had fallen 0.23 percent, or 20 cents, to $85.63 as at 09:27 GMT on the London-based ICE Futures Europe exchange.
Yesterday Goldman Sachs slashed its Q1 2015 forecast for both Brent and WTI by $15. Analysts from other major banks have also cut estimations for 2014 and 2015 crude oil prices, citing global growth concerns and ample supplies.

“It will take time to mop up this excess supply,” said Tony Nunan, oil risk manager at Mitsubishi Corp, as quoted by Reuters. “It will take either a major OPEC cut or it will take a slowdown in shale oil.”
Mohsen Qamsari, a director for international affairs at National Iranian Oil Co., was yesterday cited by the Shana Oil Ministry news service as saying OPEC was unlikely to reduce its production target when it meets next month.

The 12-member group is scheduled to discuss output policy on 27 November in Vienna. Holding an emergency meeting before then would be “ineffective” as its role has diminished compared with the 1980s amid a drop in market share, Qamsari said according to the Iranian news service.

“It’s clear that the supply situation is at a record in terms of stockpiles, so it’s going to take some time to clear that excess,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, told Bloomberg. With OPEC, “the expectation is that they will announce a cut but the question is whether or not they will deliver”.
Dennis Gartman, editor of the Gartman Letter, wrote in today’s edition:
“OPEC has no choice but to defend market share and began doing so several weeks ago when it cut its prices to its best clients days before the price slide began in earnest.”
Based on the two most actively traded contracts, those for December delivery, Brent was trading at a premium of $4.72 to WTI as of 09:27 GMT today. The spread closed at $4.83 yesterday, narrowing for the first time in a week.


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