Oil prices take a dip as global demand soars
- Global oil shortage causes a dip in major markets
- Analysts believe that a positive EU-British outcome and China-US trade deal will boost the oil markets
- Most oil-producing countries including Russia, Syria, and Saudi are experiencing low daily productions and depleting reserves
During the week ending 25 October, the Energy Information Administration registered a crude oil inventory build of 5.7 million barrels pressuring the prices of oil even further. A day before, the American Petroleum Institute had reported an inventory build of 592,000 barrels for the fourth consecutive time.
Industry experts had predicted a build of 729,000 barrels for the previous week after a barrel draw of 1.7 million disrupted inventory builds of five weeks, boosting the U.S. commercial crude oil inventories with more than 19 million barrels.
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The same week also saw gasoline inventories shed 3 million barrels with an average daily production of XX million barrels, according to the EIA report. Compared to a week earlier, gasoline stockpiles had declined by 3.1 million barrels with a daily production of 10.1 million barrels.
Meanwhile, distillate fuel stockpile dropped by a million barrels last week as the daily production averaged 5 million. The previous week, the fuel inventories fell by 2.7 million barrels while the daily production stood at 4.8 million barrels.
The EIA also confirmed that only 16 million barrels were processed during the same period with imports hitting 6.7 million barrels each day.
Oil prices have been trading low even as the China and US trade deal talks remain in the pipeline.
“The market has largely ignored the decline in U.S. crude inventories and assumed the demand side will remain weak in the foreseeable future as the global cyclical slowdown deepens,” an energy expert from CMC Markets told CNBC.
Away from the US market, Russia, the second-largest producer of oil globally said on Sunday an increase in natural gas condensate output prevented it from meeting its September supply reduction ahead of Winter.
The Organization of the Petroleum Exporting Countries (OPEC+), a fraternity made up of Russia and other oil producers, came to a decision in December last year to cut the daily oil output by 1.2 million barrels per day.
“Russia intends to fully comply with the agreed production cut in October, though it is reasonable to doubt whether this will actually be achieved,” Carsten Fritsch, an analyst from Commerzbank said.
A report from EurOil stock on Monday showed Europe’s refinery production took a 4% dip last month from the previous month and 4.2% year-on-year. Production, on the other hand, hit 10.451 BPD, causing a decline across all refineries.
Investor optimism has been causing some occasional highs in the oil markets, even as stakeholders remain hopeful that Britain will not make a dramatic exit from the EU. An EU-British deal that would avoid a no-deal Brexit should boost the market; analysts say.