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US Crude Drops to Two-Week Low as Domestic Supplies Rise

November 15, 2017 at 17:29 by Andrew Moran

Oil futures are tumbling midweek as investors comb through the details of new reports from the US government and the International Energy Agency (IEA). Crude prices are hovering around their lowest levels since the beginning of November.

December West Texas Intermediate (WTI) futures tumbled $0.38, or 0.68%, to $55.32 per barrel at 16:14 GMT on Wednesday on the New York Mercantile Exchange. US crude is trading just above a two-week low.

Brent, the international benchmark for oil prices, is also poised to settle at its lowest level since November 2. January Brent crude futures slipped $0.34, or 0.55%, to $61.87 a barrel on London’s ICE Futures exchange.

According to the US Energy Information Administration (EIA), US crude supplies climbed by 1.9 million barrels for the week ending November 10, while domestic output reached 9.65 million barrels per day (bpd). Gasoline stockpiles rose by 900,000 barrels, while distillate stockpiles slid 800,000 barrels.

The IEA said on Tuesday that it slashed its oil demand growth projections by 100,000 bpd to 1.5 million for 2017 and 1.3 million bpd for 2018. Analysts say that the revised forecast suggests the decline in demand may mean world oil consumption may not exceed 100 million bpd next year. The EIA further noted that non-cartel oil producers will add to international crude supplies by 1.8 million bpd, which means stockpiles are expected to breach 100 million bpd in 2018.

The reports come as the Organization of the Petroleum Exporting Countries (OPEC) will hold an official meeting in Vienna on November 30. The market widely anticipates that OPEC will agree to extend its output freeze at 1.8 million bpd by an additional nine months.

Industry experts argue that OPEC should be more aggressive later this month by expanding production cuts. This move that would help offset the rising production levels from the US shale revolution and reduce the global supply glut.

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