Crude Oil Falls Sharply After US Inventory Build Continues
October 24, 2018 1:41 pm
Last month, the price of crude oil rose sharply as investors braced for low supplies after Iran’s oil is cut off. The US sanctions on Iran will come into effect in a few weeks’ time. This saw the price of Brent and WTI reach four-year highs of $86.65 and $76.78 respectively.
This month however, the price of crude oil has been on a free fall that started on October 10. The recent declines are mostly because of the commitment by Saudi Arabia to increase production. Yesterday, the oil minister assured the market that the country was satisfied with the current oil prices.
The price has also been affected by the increased oil inventories. Last week, data from the EIA showed that inventories were at 6.5 million barrels. This was higher than the 1.8 million that traders were expecting. It was however higher than the massive drawdown reported by American Petroleum Institute (API).
Yesterday, data from API showed a sharp increase in inventories. The stocks jumped to more than 9 million barrels. This was much higher than the 3.9 million barrels that traders were expecting. Today, the EIA will report its findings. Still, traders expect the data to show an increase in stocks by 3.9 million barrels. A sharp increase in inventories mean that the price of crude may continue to decline.
Traders also believe that there will be no conflict between the United States and Saudi Arabia. Donald Trump’s administration has largely been silent about the murder of Khashoggi, the Saudi Arabian journalist. A conflict between the two countries would potentially mean a sharp increase in oil prices as Saudi limits production.
Last month, the price of crude oil rose sharply as investors braced for low supplies after Iran’s oil is cut off. The US sanctions on Iran will come into effect in a few weeks’ time. This saw the price of Brent and WTI reach four-year highs of $86.65 and $76.78 respectively.
This month however, the price of crude oil has been on a free fall that started on October 10. The recent declines are mostly because of the commitment by Saudi Arabia to increase production. Yesterday, the oil minister assured the market that the country was satisfied with the current oil prices.
The price has also been affected by the increased oil inventories. Last week, data from the EIA showed that inventories were at 6.5 million barrels. This was higher than the 1.8 million that traders were expecting. It was however higher than the massive drawdown reported by American Petroleum Institute (API).
Yesterday, data from API showed a sharp increase in inventories. The stocks jumped to more than 9 million barrels. This was much higher than the 3.9 million barrels that traders were expecting. Today, the EIA will report its findings. Still, traders expect the data to show an increase in stocks by 3.9 million barrels. A sharp increase in inventories mean that the price of crude may continue to decline.
Traders also believe that there will be no conflict between the United States and Saudi Arabia. Donald Trump’s administration has largely been silent about the murder of Khashoggi, the Saudi Arabian journalist. A conflict between the two countries would potentially mean a sharp increase in oil prices as Saudi limits production.
The post Crude Oil Falls Sharply After US Inventory Build Continues appeared first on Forex.Info.
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