According to a news report by Bloomberg, the price of crude oil rose after an industry report in the US indicated that gasoline surpluses in the country were shrinking. Prices went up despite uncertainty about whether OPEC was going to go through with production cuts or not.
Oil futures went up by 0.9% on Tuesday after prices fell to a 13-month low in trading earlier in the day. The American Petroleum Institute (API), an organization backed by the US oil industry, released a report that stated that the country’s gasoline inventories had dropped by 2.6 million barrels in the last week.
Oil inventories, on the other hand, rose for the 10th week in a row, according to people who had access to the data. The API also reported that the US crude oil stockpiles went up by 3.45 million barrels, which is well above the average 700,000 barrel increase that had been predicted by a Bloomberg survey. However, these numbers will be confirmed today, after the US Energy Department releases its data on crude oil.
Over the next two weeks, two critical conferences are due to the take place – the G20 Summit in Buenos Aires in Argentina and the OPEC (Organization of Petroleum Exporting Countries) policy meeting in Vienna, Austria. The key questions that will be at the fore of both these meetings will be related to the supply and demand of crude oil.
Price Futures Group analyst Phil Flynn stated that oil traders were very concerned at this point in time. The oil market has been battered very badly in the last few months and the biggest question that traders have is whether they will be able to maintain the $50 per barrel mark.
The US President Donald Trump added to the fears of decreasing demand earlier in the day by telling the Wall Street Journal that he was planning to increase tariffs on another $200 billion worth of Chinese goods if his talks with the Chinese President Xi Jinping were not fruitful.
The markets are down thanks to a number of reasons. America’s sudden change of heart with regard to sanctions on Iran, wherein exemptions were granted to the country, record outputs from Saudi Arabia as well as the ever escalating trade tensions between China and the US have all led to the creation of a bear market.
There is also tremendous speculation that Saudi Crown Prince Mohammed Bin Salman (MBS, as he is known) may not be able to defy Trump’s demands for still lower oil prices. This is because Trump supported him after the killing of Washington Post’s journalist Jamal Khashoggi.
The American benchmark, West Texas Intermediate futures for January went up by $0.45 to trade at $52.08 on the New York Mercantile Exchange after the news broke about the country’s gasoline stockpile. By the end of the trading day, WTI settled at 7 cents lower.
The international benchmark for crude oil, Brent, saw its January settlement go up by $0.32 to trade at $60.80 per barrel on the London ICE Futures Europe Exchange. The previous day, the benchmark had closed at a $0.27 loss. The global crude oil benchmark traded at premium of $8.85 to the American WTI.
In other oil related news, 31 out of 36 analysts as well as traders who took part in a global poll forecast that OPEC and Russia would announce a cut in oil outputs during their meeting in Vienna next week. According to the poll, the average expected output cut was 1.1 million barrels per day.
Gasoline futures dropped by 0.1% to trade at $1.4406 per gallon.