Pink Petro Staff

Oil slips further on initial US crude inventory data

Blog Post created by Pink Petro Staff on Oct 15, 2015

CNBC | Reuters|  October 15, 2015


Oil slipped more, nearing $49 per barrel on Thursday, staying weak after a jump in U.S. stockpiles shown in industry data the day before.  Brent eased 59 cents to $48.56 a barrel by 9:27 a.m. EDT (1327 GMT). On Wednesday it hit a low of $48.71, the weakest since Oct. 5.  U.S. crude fell 86 cents to $45.78 a barrel, after settling down 2 cents at $46.64 on Wednesday.

Data from industry group the American Petroleum Institute showed U.S. crude stocks rose by 9.4 million barrels in the week to Oct. 9 to 465.96 million, versus analyst forecasts for a 2.8 million barrels build.

The U.S. Energy Information Administration releases official government data on crude inventories at 11 a.m. (1500 GMT), one day behind schedule due to the Columbus Day holiday on Monday.

Some analysts pointed to further weakness in the months ahead with a possible eventual interest rate rise in the United States pushing the dollar higher, which makes oil more expensive for holders of other currencies.

So here is the set up: In December the Fed will hike rates and OPEC will not cut output. In Q1 of 2016, global oil inventories rise further and oil prices will drop," Bjarne Schieldrop chief commodity analyst at SEB in Oslo told the Reuters Global Oil forum.

The Organization of the Petroleum Exporting Countries meets in December. The produer group is expected to hold to its policy of maintaining market share, highlighted by Saudi Arabia's push into Russia's regional market.

The world's big oil exporters pumped more than half a billion barrels more crude than needed in the first nine months of this year, industry data gathered by Reuters and major energy market forecasters show.

In the first nine months of 2015, China's crude imports rose 8.8 percent to 248.62 million tons.

Traders said that Brent had found some support above $49 due to the strong Chinese imports.

BMI Research, part of the Fitch ratings agency, said in a note that China's crude oil imports would continue to grow over the next five years at an average annual rate of 3.2 percent.

"This will be a result of higher refinery run rates to produce gasoline and continued strategic stockpiling activity up to 2020, which will help to override macroeconomic headwinds to domestic crude demand," it said.


Photo: Sergei Karpukhin | Reuters | A worker inspects valves and pipes at an oil gathering station in Russia.