Crude oil futures drop on Thursday, after markets faced a bigger-than-expected build in the US crude supply. Freshly discovered US shale adds to weigh on oil. Will OPEC conclude the oil cut deal?
17 November, AtoZForex – Crude oil futures fell on Thursday in the wake of the bigger-than-expected increase in the US oil stocks. On Wednesday, the oil prices still kept their gains despite the build in the US crude stockpiles, yet, today the oil has weakened. Crude inventories in the US gained 5.3 million barrels in the week to November 11, in comparison to the anticipation of a 1.5 million increase.
Crude oil futures drop
The build in the US stockpiles was mostly caused by the higher imports that averaged 910,000 barrels per day (bpd), as it is reported by the US Energy Information Administration on Wednesday.
The US benchmark West Texas Intermediate (WTI) was changing hands at $45.34 per barrel, down 25 cents at 0750 GMT. The European ICE Brent crude futures dropped 26 cents, to $46.37 per barrel. Australia and New Zealand Banking Group has commented:
“Crude oil struggled to keep its head above water after the weekly EIA showed another large rise in inventories. Meanwhile, Stocks of crude oil jumped 5.27 million barrels, much more than expected.”
The Organization of the Petroleum Exporting Countries (OPEC) members are ready to reach a “forceful” consensus on limiting the oil output levels, according to the President of Venezuela, Nicolas Maduro.
Russia Supporting OPEC’s decision
The Russian Energy Minister, Alexander Novak believes that Russia supported the OPEC’s decision to freeze oil output. On Wednesday, Mr. Novak has stated that he might meet Saudi Arabia’s Energy minister Khalid al-Falih in Doha this week at a gas conference. Although, the renewed optimism that an OPEC output freeze in on track, yet, the increase in oil production and changing fundamentals are adding doubts to the agreement. Adding to the discussion, the US bank said that it maintains 2017 forecast at $58 per barrel, stating:
“The physical market has shifted back to oversupply because of surging OPEC output. The most material increases are driven by improving security conditions in Libya and (tenuously) Nigeria,”
The largest oil deposit ever
Weighing more on the Crude oil futures drop, the largest continuous oil and gas deposit ever found was discovered recently. The US Geological Survey in the United States has found the Wolfcamp shale, according to officials’ statement on Tuesday. There are 20 billion barrels of oil and 1.6 billion barrels of natural gas liquid in the Wolfcamp shale. The oil discovery is estimated at almost $900 billion. Lastly, the USGS considers the oil site to be three times bigger than the Bakken and Three Forks formations.
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