Oil slips below $55 on US stocks, Opec output
london — Oil prices fell on Wednesday following a reported rise in US crude inventories and an estimate that Opec may have produced more crude in November than previously thought, potentially undermining a planned output cut.
West Texas Intermediate for January delivery lost as much as $1.05 to $51.93 a barrel and was at $52.02 at 1:25pm London time. Brent for February settlement fell as much as 96 cents, or 1.7 per cent, to $54.76 a barrel.
Traders said the price falls followed an industry report of surprise increases in US crude inventories. Data from the American Petroleum Institute showed US crude inventories rose by 4.7 million barrels in the week to December 9, compared with analysts’ expectations for a 1.6-million-barrel decline. Inventory data from the US Energy Information Administration was to be released later.
Markets were also focused on an anticipated US interest rate hike that would likely boost the dollar, making dollar-traded fuel imports more expensive for countries using other currencies.
Greg McKenna, chief market strategist at foreign exchange and futures brokerage AxiTrader, said “traders pretty much have a Fed increase of 25 basis points locked and loaded”.
Oil traders said prices were further depressed by a report from the International Energy Agency (IEA) which said it believes Opec pumped about 34.2 million barrels per day (bpd) of crude in November, more than 500,000 bpd above Opec’s official estimate for October.
If true, that would undermine efforts by the Opec and other producers to cut almost 1.8 million bpd of production in an effort to end two years of oversupply. — Reuters