Brent plunges following bearish API report
The front-month ICE Brent contract has plunged by $2.21/bbl on the day, to trade at $62.52/bbl at 09.00 GMT.
IMAGE: Oil storage tanks. Getty Images
Upward pressure:
US President Donald Trump signed a legislation yesterday to officially end the longest federal government shutdown in the history of the country.
The legislation reinstates funding for essential federal operations that were affected by the 43-day government shutdown.
The bill got clearance from the US House of Representative and the US Senate earlier, bringing some relief, as the shutdown had dampened demand in the world’s largest oil-consuming nation by slowing federal operations, according to analysts.
With activities resuming, fuel consumption is expected to pick up.
Downward pressure:
Brent crude’s price has declined sharply as the Organisation of the Petroleum Exporting Countries (OPEC) estimated that global crude supplies will continue to exceed oil demand.
Total crude oil production by OPEC+ members averaged 43.02 million b/d last month, about 73,000 b/d lower than in September.
Oil production by OPEC+’s de-facto leader, Saudi Arabia, increased by 43,000 b/d in October to a little over 10 million b/d. Russia – the coalition’s second-largest producer – increased production by 47,000 b/d to 9.4 million b/d during the same time.
Meanwhile, the latest inventory report from the American Petroleum Institute (API) also weighed on Brent’s price. US crude oil inventories gained by 1.3 million bbls in the week ending 7 November, API reported.
“The decline was largely driven by OPEC’s revised surplus expectations for the global oil market, along with a bearish inventory report from the API,” two analysts from ING Bank noted.
By Aparupa Mazumder
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