Oil slips as oversupply fears grow
Global oil markets fell in early trading on Wednesday, weighed down by reports of rising U.S. inventories and expectations of a supply glut, while Russian supply concerns limited losses.
Price performance
Oil futures fell by 1% for each of the major global indices:
Brent crude: Down to $64 per barrel.
WTI: Decreased to $60 per barrel.
Influencing factors
1- Rising U.S. inventories
Data from the American Petroleum Institute revealed that crude oil inventories rose by 4.45 million barrels last week, signaling weak demand in the world's largest oil-consuming economy.
2- Geopolitical factors
US sanctions on Russian companies topped the list of influences, with Washington setting a November 21 deadline for companies to end their dealings with Russian energy giants Rosneft and Lukoil.
3- Asian market developments
Some Asian buyers stopping purchases from Russia added to the selling pressure, while improving European diesel markets helped contain the decline.
Reasons for yesterday's rally
Prices rose on Tuesday, supported by supply concerns, as U.S. sanctions and Ukrainian attacks on Russian energy facilities raised fears of supply disruptions.
Outlook
Markets are currently balanced between:
- Potential Russian supply concerns
- Analysts' expectations that production exceeds current demand
Official data from the US Energy Information Administration, due out later today, is expected to provide a clearer picture of market trends, with analysts expecting an average decline of 600,000 barrels in inventories according to a Reuters poll.
The balance between supply and demand concerns remains the decisive factor in determining the path of prices during the coming period, with geopolitical factors continuing to influence market volatility.
