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Oil prices fell in Asia today following an unexpected surge in US stockpiles and reports that the OPEC oil cartel is unlikely to slash production when it meets in November.
US benchmark West Texas Intermediate crude for October delivery dipped 55 cents to $93.87, while Brent crude for November delivery eased 51 cents to $98.46 in mid-morning trade.
US crude inventories
Prices were under pressure “after the US Department of Energy reported an unexpected increase of US crude inventories by 3.7 million barrels instead of the market forecast for a 1.2 million decline,” said Singapore’s United Overseas Bank (UOB) in a market commentary.
Gasoline stocks dropped 1.6 million barrels in the week to September 12, the data showed.
OPEC production
UOB said oil prices also took a hit after “conflicting reports” about the plans of the Organisation of the Petroleum Exporting Countries (OPEC) to cut its output in November due to a global supply glut and weak demand.
OPEC Secretary-General Abdullah El-Badri had said on Tuesday that the cartel would cut output in November, which helped lift prices from a two-year low.
But a Dow Jones Newswires report yesterday, citing unnamed OPEC delegates, said the organisation was unlikely to cut its production in November.
A stronger dollar added downward pressure to oil, which is traded in dollars and becomes more costly for buyers using weaker currencies.
The greenback rose after the Federal Reserve stuck to its timetable on hiking interest rates but indicated they could eventually rise more sharply than initially envisaged.
Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at consultancy EY, said investors will next be scrutinising the manufacturing data out of China and Germany on Tuesday for clues about global demand.
If the economic data from these two countries are lower than forecast, oil prices “may head lower in the near term”, he said.
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