Crude oil prices slipped further down today after the Energy Information Administration reported crude oil inventories for the week to November 23 had added 3.6 million barrels. That's compared with a build of 4.9 million barrels a week earlier.
The EIA figures came after the American Petroleum Institute reported an estimated inventory increase of 3,453 million barrels, which failed to affect prices in any significant way.
EIA also said gasoline inventories last week had declined by 800,000 barrels and distillate fuel inventories had added 2.6 million barrels. A week earlier, the authority estimated a decline of 1.3 million barrels in gasoline and a decrease of 100,000 barrels in distillate fuel inventories.
Meanwhile, production is hitting new highs and this will continue, according to most estimates, unless oil prices continue to decline rapidly. The likelihood of this happening is relatively low, however. OPEC is meeting next week in Vienna to discuss a new round of production cuts and most analysts expect the cuts to be agreed with Russia also joining in again.
However, Morgan Stanley, for one, sees a 33 percent chance of the cartel failing or refusing to agree a cut production, in which case prices will definitely slump more, pressured by bleak economic outlooks and concerns about crude oil oversupply. The argument against a production cut is simple enough: market share. It's no wonder some OPEC members have already spoken against a cut, notably Libya, which said it was expected to be granted exemption from any cuts.
Besides the OPEC meeting, oil market observers would be watching the G20 meeting, where Russia may or may not give a clear indication whether it will join any cut agreements. Just like last time, Moscow would be a crucial ally for the cartel if it decides to join the cuts or a deal-breaker if it decides to sit out.
By Irina Slav for Oilprice.com
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