Crude oil futures faced a downturn on Wednesday (Nov. 15) following the release of data indicating a substantial surge in US crude oil stocks, reaching levels beyond market expectations and signaling escalating concerns among investors.
WTI crude futures experienced a notable decline of $1.60, marking a 2% drop and concluding the day’s trading at $76.66 per barrel. Similarly, BRENT crude futures fell by $1.29, representing a 1.6% decrease, closing at $81.18 per barrel.
The US Energy Information Administration (EIA) reported a considerable rise in US crude oil stocks, soaring by 3.6 million barrels during the past week. This figure surpassed analysts’ projections by 1.8 million barrels, indicating a more substantial increase than anticipated. Concurrently, October witnessed a record surge in US crude production, reaching an all-time high of 13.2 million barrels per day, exacerbating concerns about the oversupply of crude in the market.
The surge in crude stocks and production levels sparked apprehension among investors regarding a potential slowdown in global oil demand, overshadowing positive forecasts from the Organization of the Petroleum Exporting Countries (OPEC). OPEC predicted a growth in global oil demand of 2.46 million barrels per day in 2023, slightly higher than their previous forecast of 2.44 million barrels per day. However, these optimistic projections failed to offset the worries stemming from the US crude stockpile surge.
Further adding to market pressures were signs of economic deceleration in Asian economies, particularly in Japan. The Japanese government’s revelation of a 2.1% year-on-year decline in Gross Domestic Product (GDP) for the third quarter of 2023 fell well below analysts’ expectations, who had predicted a more modest 0.6% downturn. This decline marked the first contraction in four quarters, contributing to the prevailing concerns about global economic growth.
Investor focus remains fixated on the forthcoming meetings of the Organization of the Petroleum Exporting Countries (OPEC) and allied nations, commonly referred to as OPEC+, scheduled for Nov. 26. This meeting follows OPEC+’s prior agreement to curtail production by a total of 3.66 million barrels per day until the end of 2024, with market participants closely monitoring potential decisions that could influence crude oil supplies and prices in the near term.
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Thursday, November 16, 2023