Crude oil futures edged lower during mid-morning London trading on Thursday as the International Energy Agency reported that OECD oil stocks rose above a five-year average in October, despite easing trade relations between the US and China.
At 1130 GMT, ICE February Brent crude futures were down 11 cents at $60.04/b, while the NYMEX January light sweet crude contract was down 18 cents at $50.97/b, after fluctuating throughout the trading morning. “A bullish case has yet to unfold and I struggle to see the reason why,” said Ole Hansen, head of commodity strategy at Saxo Bank. “I can sense sentiment is still fragile.”
On Thursday, the market appeared to be continuing to search for direction following conflicting signals this week, from a fresh round of cuts from OPEC and its allies, with growth concerns and high US output still weighing on sentiment.Easing trade relations between the US and China and a lower crude inventory reported by the US Energy Information Administration were lending support to prices during the Asia trading session. But by the European morning, the market was quick to reverse direction after the IEA said in its monthly oil market report that OECD oil stock levels had risen above the five-year average in October for the first time since March, to 2.872 billion barrels, reflecting the recent production surges and led by an unusually strong build in crude stocks.
Meanwhile volatility in the equities market continued to introduce uncertainty to the oil market.”Equities are bouncing up and down and it is spilling over into oil,” said at Global Risk Management analyst Michael Poulsen said. However, analysts at Commerzbank also pointed out uncertainties seen by OPEC itself in its monthly oil report.
“OPEC itself raises doubts in its monthly report as to whether the agreed cuts will be sufficient. After this year’s non-OPEC production was upwardly revised by 190,000 barrels […] it is likely to meet all of the growth in global demand. According to OPEC’s report, this means that the call on OPEC will be 1.1 million b/d lower than last year, and should fall by an additional 1 million b/d next year,” analysts said in a note Thursday morning. As of 1143 GMT, the US Dollar Index was 0.01% lower at 96.99. Platts.com
