Estimated US crude stock drop fails to lift Brent

The front-month ICE Brent contract has slumped for the third straight day, this time $1.57/bbl lower on the day, to trade at $67.37/bbl at 09.00 GMT.

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Upward pressure:

The American Petroleum Institute (API) has estimated a 3.7-million-bbl draw in US crude stocks on the week, which could mark its third straight weekly drop. The official US Energy Information Administration's weekly data is due to be released today.

China "continues to stockpile crude oil," the International Energy Agency noted in September. Coupled with recent improvements in industrial output, this could theoretically indicate that China's oil appetite will remain firm in the near-term, lending some support to Brent.

JPMorgan does not see any signs of global oil demand “slowing down structurally” in the near future, Natasha Kaneva, head of global commodities research at the private bank said in a podcast.

Domestic airline activity in China, broader Asia, Europe and the Middle East as well as port activities in the US remains strong, which is “very, very supportive for the demand numbers”, Kaneva added.

Downward pressure:

OPEC+ members could boost production by 500,000 b/d over the next three months, Bloomberg has reported citing a delegate.

Reuters has also reported that the group could hike output by 500,000 b/d in November, citing three sources.

The OPEC Secretariat has quashed such reports, calling it “inaccurate and misleading” and has urged media restraint to avoid “fuelling unnecessary speculation” in the market.

But if confirmed, such an increase will “increase the scale of the surplus through the fourth quarter of this year and next year,” ING’s head of commodity strategy, Warren Patterson noted.

OPEC+'s expected rise in production output in November, Iraq's resumption of Kurdish oil flows and rising non-OPEC+ production have fuelled fears of a global oil glut, keeping the price under pressure.

By Konica Bhatt

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