Oil prices fall on rising
U.S. crude stocks, OPEC output concerns
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[December 14, 2016]
By Ahmad Ghaddar
LONDON
(Reuters) - Oil prices fell on Wednesday following a reported rise in
U.S. crude inventories and an estimate that OPEC may have produced more
crude in November than previously thought, potentially undermining a
planned output cut.
International Brent crude futures were down 58 cents at $55.14 per
barrel at 1054 GMT.
U.S. West Texas Intermediate (WTI) crude oil futures were down 61 cents
at $52.37 a barrel.
Traders said the price falls followed an industry report of surprise
increases in U.S. crude inventories.
Data from the American Petroleum Institute showed U.S. crude inventories
rose by 4.7 million barrels in the week to Dec. 9, compared with
analysts' expectations for a 1.6-million-barrel decline. Official
inventory data from the U.S. Energy Information Administration will be
released later on Wednesday.
Markets were also focused on an anticipated U.S. interest rate hike that
would likely boost the dollar, making dollar-traded fuel imports more
expensive for countries using other currencies.
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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. [IEA/M]
If true, that would undermine efforts by the Organization of the
Petroleum Exporting Countries and other producers such as Russia to cut
almost 1.8 million bpd of production in an effort to end two years of
oversupply and cheap oil. OPEC's own November production figures will be
released later on Wednesday.
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An oil well pump jack is seen at an oil field supply yard near
Denver, Colorado, U.S., February 2, 2015. REUTERS/Rick Wilking
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The IEA said global oil supply rose to a record 98.2 million bpd in
November, with OPEC's production offsetting declines elsewhere.
This stands against expectations of 96.95 million bpd of global oil
demand for the fourth quarter of 2016.
Despite this, the IEA said that due to increased demand, oil markets
could show a shortfall of 600,000 bpd early next year if producers stick
to their reduction plans.
Saudi Energy Minister Khalid al-Falih said on Wednesday it would take
some time for the market to recover after the deal between OPEC and
rival producers to limit supplies.
"We expect the impact ... in terms of fundamentals to take several
months to be reflected on the market," Falih told reporters.
(Additional reporting by Henning Gloystein in Singapore; Editing by Dale
Hudson)
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