Oil Price Slumps to $61 after Unexpected Rise in Inventories
- IOCs see Saudi outages boosting Nigeria’s light crude
Ejiofor Alike with agency reports
Crude oil prices wednesday fell for third day on worries that fuel demand could fall after United States President, Donald Trump, doused recent optimism over China-US trade talks, at a time of rising US crude oil stockpiles.
The price of the global benchmark crude was down $1.72 to $61.38 a barrel, erasing all gains made after an attack on Saudi oil facilities sent the benchmark up around 20 per cent to $71 per barrel last week.
The price of the United States West Texas Intermediate crude dropped to $55.71 a barrel, down $1.58.
However, despite the slump in oil prices, oil majors holding cargoes of Nigerian light crude have yet to bring down prices, anticipating that outages to the output of comparable Saudi grades following the September 14 attacks on two of its main plants could still boost demand.
Energy Information Administration (EIA) reported wednesday that the US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 2.4 million barrels from the previous week.
Trump criticised China’s trade practices at the United Nations General Assembly on Tuesday and said he would not accept a “bad deal” in US-China trade negotiations.
Trump accused China of unfair trade practices, including “massive” market barriers, currency manipulation and intellectual property theft, a few days after officials from the world’s two largest oil-consuming economies held inconclusive trade talks in Washington.
“Hopefully we can reach an agreement that will be beneficial for both countries,” Trump said. “As I have made very clear, I will not accept a bad deal.”
China is the world’s largest oil importer and second-largest crude user.
The United States is the largest consumer of oil.
Trump also said he saw a path to peace with Iran even as he denounced Iran for “bloodlust”, cooling other risk premiums built into oil prices.
Oil rallied last week following a crippling attack on Saudi Arabia’s oil installations that has disrupted supplies from the world’s top exporter.
Analysts have predicted that the crude exports will increase over coming weeks after the attack on Saudi Arabia’s largest oil-processing facility that halved output in the world’s top oil exporter.
State oil company Saudi Aramco is buying oil originating in neighbouring countries to meet its supply obligations to foreign refineries, sources familiar with the matter told Reuters.
Its trading arm is arranging for crude from the United Arab Emirates and Kuwait to cover its commitments to certain buyers, the sources said.
European powers – Britain, Germany and France – backed the United States in blaming Iran for the Saudi attack, urging Tehran to agree to new talks with world powers on its nuclear and missile programmes and regional security.
Prices were also weighed down by an unexpected build in US crude inventories last week.
Meanwhile, oil majors holding cargoes of Nigerian light crude have yet to bring down prices, anticipating that outages to the output of comparable Saudi grades following the September 14 attacks on two of its main plants could still boost demand.
Reuters reported that buyer interest has continued to be high on Nigerian oil, but potential customers said current indications were too high to justify sale.
US crude inventories rose 1.4 million barrels last week, the American Petroleum Institute said on Tuesday, compared with analysts’ forecasts of a 200,000-barrel drawdown.
US crude stockpiles rose last week as refineries cut output, while petrol stocks increased and distillate inventories fell, the EIA said wednesday.
Crude inventories rose by 2.4 million barrels in the week to September 20, compared with analysts’ expectations for a 249,000-barrel decline.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 2.3 million barrels, EIA said.
Refinery crude runs fell by 194,000 barrels per day, EIA data showed while refinery utilisation rates 1.4 percentage points.
