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Highlights
- Crude oil prices tumbled nearly 2% on Wednesday.
- The US crude inventories rose unexpectedly against the expectations for a significant drop.
- The overall production in the US has increased by nearly 11.3 million bpd followed by a recovery from Gulf Coast storms.
Crude oil prices tumbled nearly 2% on Wednesday after hitting record-high levels after an unexpected surge in the US crude inventories. December delivery Brent Crude oil futures last traded at US$81.04 per barrel up 0.32%, whereas November delivery WTI crude oil futures traded 0.31% down at US$77.19 per barrel as of 07 October 2021 at 11:41 AM AEDT.
As per the US Energy Department, the crude inventories in the US rose nearly 2.3 million barrels in the last week against the expectations for a dip of 418,000 barrels. At the same time, gasoline inventories also rose whereas distillate inventories were down.
Oil’s terrific rally
OPEC | Source: © Gumpapa | Megapixl.com
Image Description- OPEC
The recent surge in the crude oil prices was underpinned by the decision of the Organization of the Petroleum Exporting Countries (OPEC) and its allies together known as OPEC+ to adhere to their original strategy of gradually increasing the output as planned in July 2021. The cartel agreed to raise the production by 400,000 bpd per month till April 2022 to vanish the existing 5.8 million bpd production cut.
The oil prices were additionally weighted after Jennifer Granholm, the U.S. Energy Secretary raised a possibility that the US could combat higher crude prices by releasing strategic reserves or by stopping potential crude exports.
The overall production in the country has increased by nearly 11.3 million bpd, followed by a solid recovery from Gulf Coast storms, that disrupted the oil and gas operations at the location, affecting the overall supply.
Meanwhile, skyrocketing gasoline prices have also encouraged consumers to increase the utilisation of crude oil, primarily in power plants and industries.
Bottom Line
Crude oil prices tumbled significantly after hitting multi-year highs followed by an unexpected surge in the US crude inventories.