Oil prices weakened to a limited extent in response to an increase in US oil inventories. The decline could continue due to recovering Gulf of Mexico oil production and COVID-19 restrictions in Europe.
World crude oil prices weakened slightly on Wednesday (17/November) after US oil inventories were reported to have increased last week.
Brent oil was down 0.48 percent at $82.30 a barrel, while WTI (West Texas Intermediate) was down 0.50 percent at $80.26 a barrel.
The American Petroleum Institute (API) said that weekly US crude inventories rose by 655k barrels as of Nov. 12.
Although below expectations of an increase of 1.55 million barrels, this increase in oil supply still kept the rally in oil prices on hold.
Previously, US oil inventories had slumped to 2.48 million barrels and pushed up oil prices in the first week of November.
COVID-19 Restrictions and Supply Rise Overshadow Oil Prices
In general, oil prices posted sharp gains from March to mid-October.
The rally throughout the period was almost undisturbed as it was supported by the OPEC+ production policy which was cautious in increasing output.
However, oil prices tend to fluctuate after President Biden urged oil-producing countries to immediately increase production.
For now, oil prices are in a consolidation phase due to a tug on market sentiment over tight supply and the risk of the latest COVID-19 restrictions in several European countries.
Analysts expect oil prices to potentially weaken again, following the statement by the International Energy Agency (IEA) regarding global oil production which increased by 1.4 million barrels per day (bpd) last month.
This figure is certain to increase again in November and December, as supplies from the Gulf of Mexico region have recovered from tropical storm Ida.
In addition, the high price of oil in recent times has indirectly suppressed demand.
Major consuming countries such as China reduced the volume of oil imports last month and released fuel reserves to the domestic market, while delaying purchases because they considered the current oil price to be too high and trigger stagflation.
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