Oil Prices, Declines on Higher OPEC Production, Increase in U.S. Crude Stocks

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On Thursday, Oil prices decline after OPEC stated its output had increased to the highest level in at least eight years and following reports of an increase in U.S. crude stockpiles.

International Brent crude oil futures were trading at $51.37 per barrel at 0256 GMT, down 44 cents, or 0.85%, from their prior close.

U.S. West Texas Intermediate (WTI) crude futures declined 54 cents, or 1.08%, at $49.64 per barrel.

Traders stated oil markets had come under pressure after the Organization of the Petroleum Exporting Countries reported an increase in production, in spite of the producer cartel having plans, possibly with non-OPEC producer Russia, to reduce production in a bid to rein in a global supply overhang.

“Crude responded predictably, with both Brent and WTI falling,” said Jeffrey Halley, senior market analyst at brokerage OANDA in Singapore.

“In the absence of any OPEC-Russia headlines to give crude its daily adrenaline shot, the market looks nervously to the EIA Crude Inventory figures due in the U.S. this evening,” Halley added.

Later on Thursday,the U.S. Energy Information Administration (EIA) is scheduled to publish official storage inventory data.

The American Petroleum Institute, a trade group, reported on Wednesday that U.S. crude inventories increase by 2.7 million barrels to 470.9 million barrels in the week to Oct. 7. This would be the 1st increase in oil stocks following five straight weeks of drops.

“Seasonally softer gasoline consumption, flagging demand from China and the return of refineries from maintenance will likely drive up global stock levels over Q4,” BMI Research said in a note, but added that it did not see stocks returning to 2015 highs.

Traders stated a strong greenback, which was soaring near seven month peaks on Thursday on reinforced prospects for a short term U.S. interest rate hike, was also influenced on crude futures.

A stronger greenback makes it more expensive for countries who use other currencies domestically to import dollar-traded oil, potentially weighing on demand.

On Additional News

The previous month, China imported record volumes of crude oil, eclipsing the United States as the world’s top purchaser of foreign oil as Beijing’s state reserves shipped in cheap crude to fill new storage tanks.

September’s crude imports increase 18% from a year earlier to 33.06 million tonnes or 8.04 million barrels per day on a daily basis, customs data presented.

The buying outperformed the U.S. four-week average gauged by the U.S. Energy Information Administration of 7.98 million barrels per day at the end of September.

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