Oil prices which saw the highest prices in the past seven years, slipped yesterday after industry reports suggested an increase in stockpiles of U.S. crude.
The crude future on the New York Stock exchange traded below $ 83 after seeing the prices increase by more than3 % in the last four trading sessions. As per Bloomberg News, The American Petroleum Institute reported that crude oil inventories increased by 3.39 barrels in the past week. The official government confirmed on Wednesday that these increases signaled consecutive four weeks of gains in inventory levels.
A pullback in crude price looks due as per one of the technical indicators. The 14-day RSI is above 70 for West Texas, a level that confirms an overbought position for crude.
Since 2014, oil has rallied to its highest level. The energy shortage coupled with rising demands after the pandemic rebound. Also, Russia indicates that it will not go out and ease the natural gas supply to Europe unless it gets the regulatory approval to ship the gas through the controversial pipeline of Nord Stream 2.
The National Energy Administration of China held a meeting with oil refiners executives on Tuesday to discuss its import of crude amidst rising prices. The meeting was to exchange views and help the regulators keep a tab on market developments. The meeting ended without any policy decision as sources.
According to Suvro Sarkar, an Energy analyst with DBS Bank, “oil price movement is not because of its fundamentals but more due to spillover from the natural gas market. He added that oil prices would remain firm despite tight supplies in winter.
Price Movements
- WTI (Western Texas Intermediate) for November delivery fell to $82.61 a barrel on New York Mercantile Exchange. This is a 0.4 % fall after rising by 0.6% on Tuesday.
- Compared to November, December deliveries were more active and fell by 0.6 % to $81.97 in Singapore. Brent also lost 0.5% to $ 84.63 on ICE’s future Europe exchange. This was after it rose 0.9% in the previous day, touching its highest level since October 2018.
Russia wants the German European council approval to use its Nord 2 pipeline in exchange for increasing the natural gas supply, according to sources close to Kremlin and state-run Gazprom. To reinforce its position, the pipeline operator said that the natural gas pipeline is full and ready for shipment but waiting till approvals are received.
As per the API, the stockpiles of U.S. gasoline and distillates, including diesel, declined last week. As per a Bloomberg survey forecast for a median estimate, the Energy Information Administration is expected to report a 2-million-barrel increase in crude inventories.
