Oil prices fell in the European morning trading session Thursday, following a US crude stock build and amid potentially bearish comments from Russia.
At 1142 GMT January ICE Brent crude futures were down 70 cents from Wednesday’s settle at $58.06/b while the January NYMEX light sweet contract was 44 cents lower at $49.85.
Commercial crude supply grew 3.58 million barrels to 450.46 million barrels during the week ended November 23, data from the US Energy Information Administration showed Wednesday, pushing inventories to 6.7% above the five-year average.
The increase ran counter to analyst expectations of a 430,000-barrel decline, according to an S&P Global Platts survey Monday, but was broadly in line with a Platts Analytics forecast of a 4.85 million-barrel build.
Elsewhere, Russian president Vladimir Putin has described $60/b as a comfortable price environment for Russia. “I think the level of around $60/b is acceptable for us as our budget is balanced at just over $40/b, for next year it is calculated at $43/b,” Putin said Wednesday at the Russia Calling! Investment Forum in Moscow.
On the same day, Saudi energy minister Khalid al-Falih said the recent price slump has shown that OPEC and its non-OPEC allies should take a “collective decision” to balance the global oil markets at next week’s meeting in Vienna. “People know leaving the market to its own devices with no clarity or no collective decision to balance the market is unhealthy,” said Falih, who is visiting his Nigerian counterpart in Abuja to seek the country’s support.
“We’ve seen that in action in the last three weeks.” Falih also said that Saudi Arabia cannot act alone and that it needs the support of the other OPEC and non-OPEC producers that have been jointly coordinating production strategies over the past two years.
The minister said he was confident the group would do the “right thing.” The overall news flow presents a bearish picture, Michael Poulsen, senior oil risk manager at Global Risk Management, said. “The trend is pointing down and has been for a couple of weeks now,” he said. Global supply is strong, localized factors notwithstanding, he said. “For now, region depending, we are very well supplied,” he said. “On a global scale that should be the case for the next year.” Platts.com
