By Barani Krishnan
Investing.com - Oil prices aren’t ready to collapse yet in the same fashion they rose. Yet, new highs aren’t happening in a market seeing steady drops or slower advances each day, especially after a forecast Tuesday that world output may actually rise in the near-term — something few expected.
The Paris-based International Energy Agency, or IEA, said global production increased by 1.4 million barrels a day last month, and will add as much again over November and December as the U.S. Gulf of Mexico restores supplies halted by the end-August Hurricane Ida.
American shale drillers also finally seem to be taking advantage of the higher crude prices to bolster drilling. Those extra barrels are coming onstream as the OPEC+ alliance continues to revive exports it halted during the pandemic, the agency said. Separately, the number of rigs actively drilling for oil in the United States rose by 60 — from a low of 394 to 454 — over the past 11 weeks.
West Texas Intermediate, the U.S. crude benchmark, settled down 12 cents, or 0.2%, at $80.76 per barrel. WTI had lost 4% over the past three weeks after gaining a net 30% over the previous seven months. The U.S. crude benchmark hit seven-year highs above $85 in mid-October and remains up 64% on the year.
London-traded Brent crude, the global benchmark for oil, settled up 38 cents, or 0.5%, at $82.43. Like WTI, Brent also lost 4% in three previous weeks. The global benchmark scaled a three-year high above $86 last month and remains up 59% for the year.
Tuesday’s rally came ahead of a weekly snapshot on U.S. crude, gasoline and distillate stockpiles due from the American Petroleum Institute. The API numbers, released each Tuesday after market settlement at 4:30 PM ET (20:30 GMT), are a precursor to official weekly inventory data due each Wednesday from the EIA, or U.S. Energy Information Administration.
Analysts tracked by Investing.com have forecast that U.S. crude inventories rose by 1.4 million barrels for the week ended Nov. 12, adding to the previous week’s gain of 1.0 million.
Gasoline inventories likely dropped by 575,000 barrels, on top of the decline of 1.56 million in the previous week, forecasts showed.
Stockpiles of distillates, which include diesel and heating oil, are expected to have fallen by 1.23 million barrels, after the previous week’s drop of 2.61 million.
Oil rallied with few interruptions between from end-March through mid-October, adding some $20 a barrel, as producer group OPEC and its allies continued to choke the market of supply amid soaring demand for energy from economies rebounding aggressively from the Covid-19 pandemic.
Oil bulls had delighted then in OPEC+’s continuous rebuffing of the administration’s plea for more oil above the miserly 400,000 barrels per day addition offered by the alliance.
The music for oil longs came to a stop three weeks ago as the Biden administration warned that it will do whatever it takes to stop runaway inflation, particularly from crude prices, from halting U.S. growth.
The administration’s caution took on an added tone of gravity after the Labor Department reported last week that the U.S. Consumer Price Index, which represents a basket of products ranging from gasoline and health care to groceries and rents, rose 6.2% during the year to October. It was the fastest growth of the so-called CPI since November 1990, an acceleration driven mostly by pump prices of gasoline at seven-year highs.