Oil Prices Fall Despite Lower Than Expected Reserves

WTI Crude Oil climbed above $52 level during the day on Friday, which of course has been supported by the US stockpile being smaller than expected. However, the gains were minor as there are ample crude supplies around the world, even though OPEC plans on doing a bit of a production cut during the month of November. In the Brent market, we reach $54 earlier in the week, but OPEC is showing that its own production numbers continue to climb, and as a result the cut in production may be a moot point before it’s all said and done. In morning session, oil turned back and currently Crude oil is trading at $50.01 while Brent is trading at $51.62 per barrel.

During the previous week, US crude inventories rose by just under 5 million barrels, which is the first time it had increased in over 6 weeks. With this being the case, it looks as if the buyers of crude oil worldwide are not ready to quite give up, but the longer-term situation looks very unlikely the support larger moves. Because of this, longer-term traders are looking at several factors that could end up being bearish before it’s all said and done. For example, the United States is seen more and more drillers reach out towards the field again, as the price of crude oil is starting to make scale profitable again. Because of this, the longer-term rally seems unlikely as there are far too many problems.

On top of that, we have softening economies around the world, and that of course will affect demand anyway. The OPEC cut that has been announced is for 750,000 barrels a day, in a market that’s already oversupplied by over 2 million barrels a day. In other words, they are not quite reaching the area of cuts that they need to affect prices. With this being the case, it looks as if the rally may continue for a while, but it is only a matter time before the sellers come back.