Oil tumbles on rising US stockpiles

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Highlights

  • Crude oil prices tumble on Wednesday.
  • The higher-than-expected rise in the US crude stocks forced investors not to hold long positions in crude oil.
  • At the start of the month, OPEC+ decided to gradually increase the output.

Crude oil prices tumbled on Wednesday after hitting multi-year highs in the previous days. The significant fall in the prices of crude oil is underpinned by a rise in the US crude oil stockpiles above expectations. The higher-than-expected rise in the US crude stocks forced investors not to hold long positions in crude oil. December delivery Brent Crude oil futures last traded at US$82.79 per barrel down 0.71%, whereas December delivery WTI crude oil futures traded 1.54% down at US$81.39 per barrel as of 28 October 2021 at 12:05 PM AEDT.

The Organization of the Petroleum Exporting Countries (OPEC) group along with its allies which is commonly known as OPEC+ decided during the beginning of the month to adhere to their original plan of boosting the output by 400,000 bpd per month till April 2022 to balance the existing production cuts.

Crude inventory boost

As per the U.S. Energy Department, crude oil inventories boosted by 4.3 million barrels in the last week, recording more than expected gains of 1.9 million barrels. On the flip side, gasoline stocks tumbled by 2 million barrels, a level not seen in the past four years.

OPEC | Source: © Gumpapa | Megapixl.com

Storage at Cushing, Oklahoma is depleted more to a level not seen in the last three years. The shortage of coal in countries like India and China has increased the demand for oil for power generation, partially offsetting the fall in prices.

Bottom Line

Crude oil prices tumbled on Wednesday after hitting multi-year highs due to a higher-than-expected rise in the US crude oil stockpiles.


 


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