Oil traders are gearing up for an impromptu meeting of Opec this weekend in Cairo. But even as ministers prepare to agree yet more supply cuts, bearish data just can’t stop getting worse. As a result, it’s looking increasingly unlikely Opec will be able to keep up with the supply cuts actually needed to support prices.
Wednesday’s inventory data showed US weekly crude stocks rose by a hefty 7.3m barrels in the week ended Nov. 21. This was well above forecasts of an 800,000 barrel increase.
Most stunningly, US demand in September was down by more than 2m barrels per day versus the year before. Miles drives fell by some 10bn miles, which was 4.4 per cent lower than the year before.
The news was equally bearish for gasoline inventories which rose by 1.8m barrels.
Coming back to Opec’s loss of control on the market, there are, however, still some hopes out there that cuts are still to feed through to market prices. Harry Tchilinguirian at BNP Paribas writes:
OPEC output has come down from its 32.7 mb/d June-July peak and in October, was estimated at 32.12 mb/d. Given roughly 35 days of travel time for VLCCs between the Persian and Gulf Coasts (via The Cape), some of the import numbers may still be reflecting the still relatively elevated level of supply at end-August, early September. Additional volumes are probably associated with Brent-related crude oil arbitraged to the US Gulf Coast where imports jumped 680 kb/d.____