Crude Oil Futures Dip

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  • Crude oil futures were lower during mid-morning trade in Asia on Nov. 17, after concerns of tight supply eased amid expectations of increasing US shale activity and reports of the US requesting China to release its oil reserves.
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  • Meanwhile, the American Petroleum Institute has estimated a 0.655 million-barrel build in US crude inventories for the week ended Nov. 12, according to media reports.

Crude oil prices fell in Asia’s mid-morning trade on Nov. 17 as concerns over restricted supply faded despite rising US shale production and news that the US had asked China to surrender its oil reserves as reported by S&P Global.

Strong oil prices

Following the release of the International Energy Agency’s monthly Oil Market Report late Nov. 16, which highlighted the role that post-hurricane increases in US shale production, spurred by strong oil prices, played in meeting recovering demand, oil prices fell slightly as support from a tight supply outlook eroded slightly.

“The world oil market is tight by all metrics,” according to the research, “but a respite from the price increase could be on the horizon…not because demand is dropping, but because oil supply is rising.”

The US Energy Information Administration’s monthly Drilling Productivity Report, released Nov. 15, backed up the anticipation of increased shale output, forecasting an 85,000 b/d rise in oil production from November to December, with the Permian basin likely producing the most.

Crude stocks decline

Furthermore, media reports that the US has asked China to release its oil reserves in order to help stabilise high crude oil prices as part of continuing economic talks between the two nations have boosted anticipation of a supply increase.

On Nov. 17, ING analyst Warren Patterson told S&P Global Platts, “That might very well be what is driving prices down today; let’s see whether we get a joint release of SPR from them.”

“However, it’s crucial to keep in mind that the SPR release is only a temporary fix.”

According to media sources, the American Petroleum Institute estimates a 0.655 million-barrel gain in US oil stockpiles for the week ending Nov. 12.

According to estimates, nationwide commercial crude stocks fell 2.5 million barrels last week to roughly 432.6 million barrels.

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Source: S&P Global

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