Oil price continues to rise between two contradictory US inventory reports


The inexplicable fluctuation of crude oil continued on Thursday, perhaps fuelled by the anticipation of a potential move by the US to calm the crude oil markets.

As of 14:45 on Thursday, the price of WTI and Brent were at $81.83 and $83.19 respectively.

The US crude oil inventories, according to the industry-funded API, American Petroleum Institute, fell down by 2.485 million barrels for the week ending November, 5; it was significant on Tuesday for the crude oil market watchers, as the good news came after six weeks of inventory builds.

On Wednesday, however, the EIA, the US Energy Information Administration, contradicted the short-lived positive perception with its own data; the crude build, according to the EIA, continued for the seventh successive week,  for the week ending November, 5, with over 1 million barrels.

In response, the oil price fell during the early hours of trading on Thursday, although prices recovered later on the day.

At present, there is a palpable anxiety lingering in the crude oil markets over a potential response from the US administration, having been snubbed by the OPEC+ -  by refusing to increase the oil output.

President Biden raised the stakes at the weekend while referring to some unspecified tools that are at his disposal, if the price of crude oil does not come down.

Since the impasse is purely a supply-demand issue, analysts hope that the administration will tap the Strategic Petroleum Reserves, SPRs, in order to deal with the supply side of equation. Although it is not the last resort, the administration seems to be reluctant to go along that path.

As the inflationary pressure bites, the momentum of the collective appeal made by the most industrialized nations in the world to the OPEC+ to increase the supply is gathering momentum on political front. No nation appears to be insulated against the rising energy prices.

Analysts, meanwhile, do not pin their hopes on the arrival of Iranian oil to the markets at any time soon; despite the optimism to restarting the negotiations on November 29, the Iranian rhetoric does not signal any early breakthrough. In the latest move, the Iranians said that the talks were about lifting the sanctions and not about the nuclear issues.

In short, the US, which still calls shots when it comes to the final outcome, and Iran are still far apart from each other as never before along ideological fault lines.   

In this context, analysts believe the possibility of crude oil markets being swamped by the Iranian oil, is still very low. That means the price of crude oil will hover over around $80 for months to come.


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