WTI drops below $46 in post-settlement after API reports surprise build in crude stocks
Although it looked like the price for the barrel of West Texas Intermediate was stabilizing above the $50 mark last week, yesterday's sharp selloff followed by today's drop showed that markets are not convinced that OPEC's latest effort won't be enough to balance the market.
The barrel of WTI slumped to its lowest level in 16 months at $45.77 on Tuesday and staged a modest recovery to settle at $46.43. With the latest API data showing a large build in U.S. crude oil stocks, the WTI extended its slide in the post-settlement trade and was last seen trading at $45.98, losing 6.4% on a daily basis.
"Crude inventories rose by 3.5 million barrels in the week to Dec. 14 to 441.3 million, compared with analysts' expectations for a decrease of 2.4 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.1 million barrels, API said," Reuters reported.
The decision by OPEC+ to cut the output by a total of an additional 1.2 million barrels will go into effect next month and the all-time high output levels recorded in Saudi Arabia and Russia in December suggests that the additional output cut from the current levels is unlikely to boost the prices as intended. Additionally, the U.S. Energy Information Administration today said that the oil production from seven major U.S. shale basis was expected to surpass 8 million barrels per day for the first time by the end of the year.