Crude Prices Slip as Expert Warns that Russia and Saudis May Be Pumping Too Much

But the experts still can't agree if the market is tight or oversupplied: File Image/PixaBay

The analytical community's position that the crude market will continue to slide until the global economy makes a dramatic turnaround was further reinforced on Wednesday, as oil prices fell to their lowest level in almost two months.

West Texas Intermediate fell 98 cents to settle at $52.64 per barrel, while Brent slipped $1.20 to $57.69 per barrel.

Ironically, experts can't decide if a contributing factor to the price declines - the perception of swelling global inventory - is justified or not: Gene McGillian, manager of market research at Tradition Energy, remarked, "Demand destruction fears have the market in its grips today and today's build in U.S. crude stocks doesn't help that" - a reference to U.S. stockpiles rising by 3.1 million barrels last week, according to the Energy Information Administration.

However, analysts at JBC Energy GmbH said, "Crude markets remain tight."

But they conceded that "the dominating force right now is simply the gloomy economic-demand outlook," and they added that the oil market has "so many things to worry about."

Riding the crest of the grim sentiment was Bob McNally, president of Rapidan Energy Group, who wondered if Russia and Saudi Arabia are still pumping too much oil despite their vow to keep supply and demand balanced.

He remarked that the two nations "face considerable peril next year: oil demand growth is hitting the skids as macroeconomic, trade, and political risk drivers continue to intensify, from Brexit to impeachment through Persian Gulf conflict risk and the U.S.-China trade war."

McNally pointed out that "When we get to December, the outlook for 2020 will seem more oversupplied than it does today," and the question will be "less whether Moscow and Riyadh will signal unity and resolve to keep a floor under oil prices next year, but instead whether their signalling and supply policies will be sufficient to keep pace with fast-shifting fundamentals."

Alexander Novak, energy minister for the former Soviet Union, on Wednesday said that uncertainty over global crude demand and price volatility are making it difficult to forecast how the oil market will behave this winter in the northern hemisphere; however.