Crude Prices Mixed On Swelling Inventories, But OPEC Maintains Positive Forecast

The cartel again suggested that glut concerns are overblown: File Image/PixaBay

While the good news of progress in the U.S./China trade talks and the prospect of a lower than expected global crude surplus remained intact, the most ephemeral of events - a higher than forecast build of U.S. crude inventories - was enough for oil to trade flat on Thursday.

Brent climbed 3 cents to $62.40 per barrel, while West Texas Intermediate dropped 20 cents to $56.92 per barrel.

Reportedly dismaying traders was the Energy Information Administration disclosing that U.S. crude stockpiles grew last week by 2.2 million barrels, compared with analysts' forecasts in a Reuters poll for a 1.649 million barrel rise.

Breaking down the numbers further, the EIA pointed out that crude production rose by 200,000 barrels per day (bpd) to a weekly record of 12.8 million bpd.

Presumably, numbers-obsessed traders were also perplexed by the news that while industrial output rose more slowly than expected in China in October, oil refinery throughput hit the second-highest level on record.

Moving forward, Norbert Rucker, head of economics at Julius Baer, remarked that "The countdown to the meeting of the OPEC [the Organization of the Petroleum Exporting Countries] countries has started, and the question of whether the group and its allies will further cut supplies is top of mind."

For its part, OPEC on Thursday said demand for its crude would average 29.58 million bpd next year, 1.12 million bpd less than in 2019 - which points to a 2020 surplus of about 70,000 bpd, less than indicated in previous reports.

OPEC's latest monthly report stated, "Signs of improving trade relations between the U.S. and China, a potential agreement on Brexit after the United Kingdom's general election, fiscal stimulus in Japan, and a stabilization of the downward slope in major emerging economies could stabilize growth at the current forecast level."

The report also said oil inventories in developed economies fell in September, a trend that could ease analytical concern about a glut.