Oil prices fell on Wednesday after industry data indicated a larger than expected increase in U.S. inventories, while attention remained on potential supply disruptions due to a hurricane in the Gulf of Mexico. Markets were also monitoring the U.S. presidential election and a significant political meeting in China for additional insights.
Brent oil futures expiring in January dropped 0.6 percent to $75.11 a barrel, while West Texas Intermediate crude futures declined 0.5 percent to $71.24 a barrel by 20:11 ET (01:11 GMT). Oil prices had been experiencing some gains in recent sessions, following the Organization of Petroleum Exporting Countries and allies (OPEC+) postponing plans to increase production this year. Expectations of U.S. supply disruptions also supported crude prices, alongside a weaker dollar.
API reports significant inventory growth
According to the American Petroleum Institute (API), U.S. oil inventories rose by 3.1 million barrels in the week ending November 1, significantly higher than the anticipated increase of 1.8 million barrels. Product inventories, including gasoline and distillates, saw minor draws. The API data typically precedes a similar report from official inventory sources, which is expected later on Wednesday. This reading raised concerns that U.S. fuel demand might be weakening, especially with the winter season approaching.
U.S. production remains high
U.S. production is anticipated to have remained near record highs of over 13 million barrels per day, keeping domestic supplies relatively elevated. However, U.S. oil production could face some interruptions in the coming days, particularly as energy companies began evacuating workers in the Gulf of Mexico ahead of Hurricane Storm Rafael, which is predicted to make landfall in Louisiana later this week. The storm intensified into a category-1 hurricane on Tuesday.
Traders brace for a busy week
Oil markets are preparing for a busy week, with risk appetite among crude traders still limited as they brace for a series of significant signals expected in the coming days. The primary focus is on the 2024 presidential election, with early reports from the Associated Press indicating Donald Trump gaining ground over Kamala Harris, although a large portion of the votes remains uncounted. Additionally, attention this week is directed toward a meeting of China’s National People’s Congress, where Beijing is anticipated to announce further plans for fiscal spending. A Federal Reserve meeting is also crucial, with expectations that the central bank will reduce interest rates by 25 basis points on Thursday.
Prices stabilize amid political developments
Oil prices stabilized on Tuesday following a notable rise in recent trading sessions, as traders sought further insights from the upcoming U.S. presidential election and a major political summit in China. Heightened tensions in the Middle East also provided limited support for crude prices. By 20:02 ET (01:02 GMT), January Brent oil futures had decreased by 0.2 percent to $74.93 per barrel, while West Texas Intermediate (WTI) crude futures experienced a similar decline, falling 0.2 percent to $70.90 per barrel.
OPEC+ announcement boosts prices
On Monday, oil prices surged after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced a one-month delay in their output increase plans, which tightened the market outlook. However, despite these recent gains, oil prices remained close to the near three-year lows seen earlier in the year, with ongoing concerns about slowing demand, particularly from China, the largest importer. On Monday, prices continued to rise, gaining over $1 after OPEC+ announced the delay. By 04:02 GMT, Brent futures had increased by $1.18 per barrel, reflecting a 1.61 percent rise to $74.28 per barrel. Meanwhile, WTI crude saw an increase of $1.21 per barrel, or 1.74 percent, reaching $70.70.
Geopolitical tensions influence market
On Friday, oil prices also climbed, gaining more than $1 per barrel as they attempted to offset weekly losses amid escalating geopolitical tensions in the Middle East. Brent crude futures for January delivery rose by $1.41, or 2 percent, reaching $74.22 a barrel by 04:56 GMT, while U.S. WTI crude futures increased by $1.46, or 2.1 percent, to $70.72 per barrel, following a 0.95 percent rise in the previous session.
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