London — Oil prices fell after U.S. trading opened on Thursday as higher {{8849|U.S. crude oil inventories and a strong dollar outweighed bullishness from supply deficit forecasts.
U.S. oil slipped by $1.54 to $73.29 a barrel. Brent crude for November delivery was down 92 cents at $77.72 by 1350 GMT on its expiry day while December-loading crude eased by $1.42 to $76.67.
U.S. oil and fuel stockpiles increased by 4.6 million barrels to 418.5 million barrels in the week to Sept. 24, the U.S. Energy Department’s Energy Information Administration (EIA) said on Wednesday. [EIA/S]
In another usually bearish development, the U.S. dollar hit a new one-year high, making oil more expensive for holders of other currencies.
But expectations of a continued supply deficit supported prices. Citigroup is forecasting oil balances to be in a 1.5 million barrel per day deficit on average over the next six months, even with continued supply increases.
Both November-loading contracts rose by about 8% over September.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, are next week expected to hold to a pact to add 400,000 barrels per day (bpd) to their output for November.
PVM analyst Tamas Varga said that expected growth in demand means that the agreed output increase would not be sufficient to prevent declining inventories for the rest of the year.
Last week’s rise in U.S. inventories came as production in the Gulf returned close to levels reached before Hurricane Ida struck about a month ago.
A possible dampener on oil prices has been the power crisis and housing market concerns in China, which have hit sentiment because any fallout for the world’s second-biggest economy is likely to affect oil demand, analysts have said.
China is the world’s biggest crude importer and its second-largest consumer behind the United States.
- By Shadia Nasralla (Reuters)
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