A barrel of Brent North Sea crude for December delivery was at US $82.38 on the Intercontinental Exchange (ICE) in London, down 45 cents from Tuesday’s closure. The European benchmark crude even touched a session-low since October 21, 2010, to $81.63.
In electronic trading on the New York Mercantile Exchange (Nymex), a barrel of “light sweet crude” (WTI) of the same maturity lost 20 cents to $76.99.
“Oil has again plunged while forecasting a rise in US crude inventories had spurred speculation that the growth would outpace demand,” stated Mike van Dulken, an analyst at Accendo Markets.
The US Department of Energy (DOE) is to give Wednesday at 10am the level of US oil reserves summary for the last week of October.
Analysts surveyed by Dow Jones agency report that crude inventories have increased by 2.2 million barrels, while stocks of gasoline and distillates (including diesel and heating oil) have respectively decreased by 300,000 barrels and 1.8 million barrels.
An increase in crude inventories is generally well received by investors, who see it as a sign of supply glut or weak demand in the US market.
“The United States and OPEC held by the goatee”
After trying to stabilize for two weeks, crude prices have subsided into sharp decline on Tuesday, falling to their lowest levels since 2010 in London and 2011 in New York.
Black gold has been weighed down by the announcement of a lower selling price of crude from Saudi Arabia to the United States, which observers have interpreted as a sign that the new leader of the Organization of petroleum Exporting Countries (OPEC) cares more about the market share than the market equilibrium.
Mike van Dulken, “the United States and OPEC held by the goatee,” waiting to see who will drop the first production – plummeting crude prices in recent months are particularly attributed to the oversupply on the market.
According to analysts at Barclays, “the producers of shale oil will probably be the first to be affected by an environment of low prices,” with the OPEC countries with lowering production costs.
In the United States, the exploitation of oil shale has grown strongly in recent years, leading to a significant increase in US crude production since 2008 (the year in which the country had produced an average of 5 million barrels per day).
The offer of the world’s largest consumer of crude oil and is higher in late October to nearly 9 million barrels per day, a level not seen since at least 30 years.
Even the United States does not export its crude, thus misbalancing in the global market by forcing their former suppliers to find other outlets in a market already well stocked.
Since mid-June, oil prices have fallen by just under 30%, while they evolved since 2011 in a relatively narrow price range (between 100 and 120 dollars for Brent).