A combination of high oil inventories, low profits and mediocre hopes for an OPEC agreement converged to dampen oil prices this week.
In early trading on Friday, Brent crude was priced around US$46 with WTI just above US$44 a barrel.
Staying fit at fifty, is proving extremely difficult in such an uncertain market.
Analysts were expecting a further drop in US inventories last week, but stocks rose more than 14 million barrels, according to the US Energy Information Administration; the highest stock build on record.
This obviously surprised the market as did a rise in US imports by 1.99 million barrels while American domestic production rose slightly to 8.52 million barrels a day.
This is not the best news for a market hoping for a sustained price increase for the remainder of the year.
Seeing oil output rising
We’re also seeing increased oil production from OPEC and non-OPEC players.
We’re hearing reports that oil trading group Vitol will lift its first cargo of Libya’s Es Sider crude oil since the end 2014.
The estimated 600,000-barrel shipment from Ras Lanuf terminal is expected to load mid-month.
Shipments of crude from the North Sea are back in focus as Bloomberg released data of expectations of a 10 percent month on month rise to around 12.16 million barrels a day for December.
This data has been compiled looking at proposed cargoes to be lifted, looking at an increase of 360,000 barrels a day.
News from Russia’s biggest oil producer Rosneft says it has begun production in the eastern Siberian region with shipments from the Yurubcheno-Tokhomskoye field.
The company has said the potential for this field by 2019 could be 100,000 a day.
Lukoil is also planning to start production at a new Caspian Sea field.
With so much new oil coming on to the market, many analysts are skeptical about a deal at the end of November.
OPEC remains optimistic in the light of such market volatility and in its monthly publication, the OPEC Bulletin, said the organisation remains “deeply optimistic about the possibility that the Algiers Agreement will be complemented by precise, decisive action among all producers; the kind of action that we need in order to see prices supported and short-term volatility avoided.”
The opening editorial also sent a note of disapproval to the skeptics out there suggesting that “industry observers should remember that they should not be too quick to judge or criticize the Organization or its Member Countries.
Over the years, we have seen how wildly inaccurate their predictions have been,” adding, “what many of them have failed to recognize is that OPEC’s great strength is its global reach and its diversity.”
The OPEC Secretary General, Mohammad Barkindo along with many of the top international energy CEOs will be in Abu Dhabi next week for one of the world’s biggest energy conferences at ADIPEC.
Any news from the Abu Dhabi conference next week is not likely to move the markets, but what everyone will be watching will be the results of the US elections.
Many analysts say the nervousness and uncertainty has traders pulling funds from futures markets as a clear decision is too tight to call right now.