Oil prices have declined after US industry data showed a bigger-than-expected rise in crude inventory.
Brent crude futures dropped 31 cents to $59.39 a barrel, while US West Texas Intermediate (WTI) crude edged down 43 cents to $54.05 a barrel, reported Reuters. Data released by the American Petroleum Institute has highlighted an increase in US crude stocks by 4.5 million barrels to 437 million barrels in the week that ended on 18 October 2019.
Investors are awaiting the inventory data to be released by the US Energy Information Administration (EIA). The members of the Organization of the Petroleum Exporting Countries (OPEC) are planning whether to deepen production cuts on concerns of weak demand growth in 2020.
AxiTrader market strategist Stephen Innes was quoted by Reuters as saying: “The OPEC induced oil rally has come to a grinding halt in the wake of the bearish to consensus API inventory swell.
“Further OPEC cuts are unlikely the cure-all medicine. But by the numbers, the magnitude of the expected oversupply in 2020 is thought to be well within OPEC’s ability to manage.”
OPEC and other major oil producing countries including Russia, a group which is known as OPEC+, have promised to cut output by 1.2 million barrels per day (bpd) until March 2020. However, OPEC’s de facto leader Saudi Arabia wants to boost Saudi’s production first before committing on additional output cuts, according to the sources from the oil-producing club.
Meanwhile, China and the US are also helping to cushion overall sentiment for oil. US President Donald Trump said that trade negotiations are progressing, raising expectations that the world’s largest economies may sign a deal as soon as next month.