Crude inventories in the U.S. rose by 5.3 million barrels in the week to November 11th, 2016
Crude oil futures dropped on Thursday, November 17th, 2016, after data released by the U.S. Energy Information Administration (EIA) on November 16th, 2016, indicated a larger-than-expected build-up of U.S. oil stocks, as reported by Reuters. Crude inventories in the U.S. rose by 5.3 million barrels in the week to November 11th, 2016, compared to expectations for an increase of 1.5 million barrels. The climb in inventories was mainly due to higher imports that averaged 910,000 barrels per day (bpd), as per the EIA. U.S. crude oil inventories are at the upper limit of the average range for this time of year, according to the EIA. Crude oil prices also fell after OPEC talks to agree output cuts showed signs of strain.
U.S. benchmark WTI crude CLc1 was down 1.02% to $45.51 a barrel on November 17th, 2016. European ICE Brent LCOc1 crude futures fell 0.95% to $46.05 per barrel. Refining margins in all five U.S. regional petroleum districts fell in the week ended November 11th, 2016.
OPEC ready for forceful agreement on oil curbs
In a recent development, OPEC countries are ready to reach a “forceful” agreement on cutting oil output, according to Venezuelan President Nicolas Maduro, following a meeting with OPEC Secretary-General Mohammed Barkindo in Caracas. Russia has also expressed willingness to support an OPEC decision to freeze oil output, Russian Energy Minister Alexander Novak stated on November 16th, 2016.
International crude oil prices witnessed the biggest weekly loss in almost 10 months on November 4th, 2016, on fading hopes that the Organization of the Petroleum Exporting Countries (OPEC) would be able to strike a deal to cut production and ease the prevailing global glut. Oil prices closed at the lowest level on November 3rd, 2016, since the OPEC reached a preliminary accord on September 29th, 2016, in Algiers for the cuts. International crude oil prices dipped over doubts that efforts to curb crude production could materially alter the global oil balance and reduce oil inventories that have been ailing the oil industry over the past two years.
Fall in U.S. rig count
Meanwhile, Baker Hughes data showed that the total number of oil rigs operating in U.S. fields fell by 1 to 568 as of November 11th, 2016, compared to 767 in the year-ago period. The number of rotary rigs drilling for oil was up 2 at 452. There are 122 fewer rigs targeting oil than last year.
The focus now shifts to the next OPEC meeting in Vienna on November 30th, 2016, where members will chalk out detailed plans to curb oil output to reduce the market glut for the remainder of 2016 and early 2017.