LONDON-Oil fell below $44 a barrel on Wednesday as a rise in U.S. inventories added to the global glut and investors discounted the possibility of OPEC cutting output at this week’s meeting.
Brent crude LCOc1 was down 85 cents at $43.59 a barrel by 1430 GMT, falling for a fifth consecutive session. It dropped as low as $43.51, its weakest level since November 18, and was on track for its lowest close in two weeks.
U.S. crude CLc1 traded 78 cents down at $41.07 a barrel.
Current oil production is substantially outpacing demand and the growing global surplus has sent prices tumbling by more than 60 percent since June 2014.
The Organisation of the Petroleum Exporting Countries (OPEC), however, is not expected to budge from its stance of keeping output high to defend market share against producers such as Russia and North America.
“The market ascribes an extremely low probability to a change in OPEC policy,” said Bjarne Schieldrop, chief commodity analyst at SEB in Oslo.
“If investors thought there was even the slightest risk, we would have seen prices rise in the run up to the meeting.”
Beyond OPEC’s meeting, oil traders remained focused on growing stockpiles and high production.
Russia continued extracting oil at a post-Soviet record of 10.78 million barrels a day (bpd) in November despite low oil prices, Energy Ministry data showed yesterday.
Data from the American Petroleum Institute (API) showed a 1.6 million-barrel rise in U.S. crude inventories last week to 489.9 million barrels.
The U.S. government’s Energy Information Administration’s latest inventory report will be published at 1530 GMT. Analysts forecast a small fall in stockpiles after nine consecutive weeks of gains. [EIA/S]
Oil was also pressured by the dollar’s strength, which makes it more expensive for holders of other currencies. .DXY.
Many analysts remain skeptical over oil prices recovering in 2016.
“We maintain our bearish or sideway move in oil prices in the next 2-3 months as things haven’t really changed fundamentally, despite data showing a decline in stocks builds by end of next year,” Natixis oil analyst Abhishek Deshpande told the Reuters Global Oil Forum. Reuters