Published: Wed, November 20, 2019
Markets | By Otis Pena

Oil Prices Higher Despite Bearish Inventory Data

Oil Prices Higher Despite Bearish Inventory Data

Oil steadied after falling to a two-week low on signs of swelling American crude inventories, while heightened political tensions clouded the chances of a trade deal between the USA and China.

Futures fell as much as 2.7% in NY, the biggest intraday decline since October 14. Industry data showed crude stockpiles rose by 5.95 million barrels last week, about four times the increase analysts expect the government will report Wednesday. Despite a looming glut in 2020, Saudi Arabia and Russian Federation aren't aiming to announce deeper production cuts when the Organization of Petroleum Exporting Countries and its partners meet in Vienna early next month.

A Chinese government source was quoted by broadcaster CNBC on Monday as saying there was gloom in Beijing about prospects for a trade deal, with Chinese officials troubled by U.S. President Donald Trump's comment that there was no agreement on phasing out tariffs.

China on Wednesday also condemned legislation passed by the US Senate aimed at protecting human rights in Hong Kong amid a crackdown on a pro-democracy protest movement.

-China trade dispute, higher than expected Norwegian oil output and forecasts of rising USA crude inventories. "Crude oil supply glut could develop in 2020 if demand doesn't improve from current levels", Abhishek Bansal, chairman of ABans Group of Companies, said in a note. On the other hand, a breakdown of $54.85 (monthly low Nov.20) would expose $53.71 (low Oct.31) and finally $50.99 (monthly low Oct.3). The more-active January contract declined 4 cents to $55.31.

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The WTI Crude Oil market fell rather hard during the trading session on Tuesday, reaching below the 50 day EMA as there was a general malaise about risk appetite during trading.

Brent crude futures settled at $62.44 a barrel, down 86 cents, or 1.4 per cent. The global benchmark crude traded at a $5.61 premium to WTI for the same month.

Investors will now eye weekly US crude oil inventory data by the American Petroleum Institute and also monitor any developments in US-China trade negotiations.

That adds pressure on the supply side which was already bearing the burden of Reuters news that Russian Federation was unlikely to agree to deepen additional oil output cuts at the Organization of the Petroleum Exporting Countries' (OPEC) meeting in Vienna on December 5th.

-With assistance from James Thornhill.

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