Oil Slips Again On OPEC Delay As U.S. Crude Inventories Rise

Meanwhile, the path to normality begins as Britain approves the Covid vaccine: File Image/Pixabay

The Organization of the Petroleum Exporting Countries' (OPEC) delay in deciding whether to extend current output cuts, and thus help balance supply and demand during the second wave of pandemic lockdowns, caused oil prices on Wednesday to once again slip - but minimally.

The cartel may decide on Thursday to increase production in January or extend the cutbacks by three months, and while numerous insiders and analysts favour the latter scenario, the tension from waiting for an answer resulted in Brent dropping 13 cents at $47.29 per barrel and West Texas Intermediate declining 21 cents at $44.34.

Also weighing on prices was the American Petroleum Institute disclosing that U.S. crude inventories rose by 4.1 million barrels last week, compared with expectations for a draw of 2.4 million barrels.

Bjornar Tonhaugen, head of oil markets at Rystad Energy, said, “Traders would not take huge gambles today, as they are waiting for the final verdict of Thursday’s OPEC+ meeting: when stakes are so high, it is dangerous to move prices much ahead.”

But overall sentiment remained strong as Britain on Wednesday became the first western country to approve a Covid vaccine, ahead of the U.S. and the European Union in what is widely considered the start toward a return to normal life and normal rates of oil consumption.

Change in dynamics of a different sort - the recent election of Joe Biden as the new American president - spurred Dharmendra Pradhan, oil minister of India, to state that his country wants to diversify its oil imports, including the resumption of supplies from Iran and Venezuela.

He said on Wednesday, “As a buyer I would like to have more buying places; I should have more destinations to go for purchasing (oil).”

Venezuela, meanwhile, almost doubled its oil exports in November with a total of 24 cargoes carrying 639,000 barrels per day (bpd) of crude and refined products, an increase from the 360,000 bpd exported in October.

Data showed that their main destination was Asia and over half of these exports were received by new buyers including Xiamen Logistic Grass, Olympia Stly Trading, Zaguhan & Co, Karaznbas, Kalinin Business International, and Poseidon GDL Solutions;