Oil prices increased in Asia despite weekly data presented crude inventories surged more than expected. News that recommends OPEC might extend output cuts cited as supportive for oil today.
U.S. crude oil WTI futures traded 0.6% to $57.11. Also, the International Brent oil futures increased by 0.6% to $62.62.
The increased came after OPEC said that it expected demand for its oil to drop in 2020. This provides a clear case for the group to maintain limits on output.
The EIA said U.S. crude inventories surged by 2.2 million barrels for the week of Nov. 8. Their expectations for a build of 1.65 million barrels, according to analysts.
Gasoline inventories increased by almost 1.9 million barrels, compared to expectations for a decrease of 1.17 million barrels. Also, distillate stockpiles dropped by about 2.5 million barrels, versus reports for a decline of 950,000 barrels.
An analyst said the crude builds once again are coming in at the expected levels for the late shoulder season of demand, going into winter. Also, both the 2.2 million bpd crude oil build and 1.0 million gasoline build advantage expectations, specifically gasoline, which went reverse to expectations.
The inventory count was released a day later due to federal holiday for Veteran’s Day.
OPEC and allies on Jan. 1 production cut by 1.2 million barrels per day, and in July, the alliance renews the pact until March 2020.
Demand for its crude would total 29.58 million bpd next year, 1.12 million bpd less than in 2019. That points to a 2020 surplus of around 70,000 bpd, which is less than inputted in recent reports.
The producer association will meet in Vienna next month.
Oil Increased as Hopes Build for OPEC Supply Curbs
Oil prices increased as OPEC’s outlook for oil demand next year gained hopes that the group and its allies will keep a lid on the supply at the December meeting.
The United States and China could soon sign a deal to end their trade war. Also, this leaked into the market after the White House economic adviser said an agreement was getting close.
Brent crude futures increased 28 cents, or 0.5%, at $62.56 a barrel, it fell 9 cents on Thursday.
Moreover, WTI crude surged 28 cents, or 0.5%, at $57.05 a barrel, after dropping 0.6% in the recent session.
The rosy mood came after OPEC said it expected demand for its oil to drop in 2020.
Many analysts said there’s a clear case for the OPEC and Russia to maintain limits on output that introduced to cope with a supply glut.
Contrarily, Probis Group’s chief investment officer said that such a move might backfire.
Additionally, there is no rational reason to extend the cuts since the economy is softening. If the oil prices push higher, it is going to hurt everyone, and even if it does not, it’s only going to play into the U.S. producers’ hands.
In the U.S., output keeps increasing although there was an increase in U.S. stockpiles and rising production last week. This is something that would often lead shareholders to sell.
Moreover, crude production increased by 200,000 bpd to a weekly record of 12.8 million bpd, the EIA in its weekly report.
U.S. crude inventories increased last week by 2.2 million barrels, the EIA said. Also, it exceeds the 1.649 million-barrel increase forecast by analysts.