Crude Oil Falls Amid Increasing Excess Supply Concerns

(RTTNews) - Crude oil has edged down on Thursday as traders' concerns increase about surplus oil flooding the market.

WTI Crude Oil for December delivery was last seen trading down by $0.21 (or 0.35%) at $59.39 per barrel.

Data released by the American Petroleum Institute on Tuesday revealed that the U.S. crude oil inventories increased by 6.5 million barrels for the week ending October 31 following a 4-million barrel draw in the previous week.

Meanwhile, data released by the U.S. Energy Information Administration stated that crude oil inventories rose by 5.202 million barrels for the week ending October 31.

The report further stated that gasoline inventories tumbled by 4.7 million barrels last week, while distillate fuel inventories (which include heating oil and diesel) edged down by 0.6 million barrels.

In its latest weekly petroleum status report, the EIA stated that at 421.2 million barrels, U.S. crude oil inventories are about 4% below the five-year average for this time of year.

The EIA's next weekly petroleum status report is scheduled to be released on November 13, which will include data for the week ending November 7.

Adding to pressure to oil prices due to supply concerns, Libya has announced plans to ramp up production to 1.6 million barrels per day next year and 2 million bpd within five years.

On Sunday, citing "seasonality," the OPEC+ alliance announced that they would add another 137,000 barrels per day in December but would halt any further increases for the upcoming January, February and March months.

Entering day number 37, the U.S. government shutdown has now gone in history as the longest shutdown the nation has seen.

The shutdown could slow down the economy tremendously and reduce oil and energy consumption and trigger a fall in oil prices. Traders are concerned of this downside risk.

Last Thursday, the U.S. and China agreed to lift tariffs on each other and ease export-related restrictions, diminishing the threat of a trade war. An increase in bilateral trade between the world's economic majors is expected to increase oil demand.

Yesterday, U.S. Supreme Court hearings on a case testing the legal validity of U.S. President Donald Trump's tariff imposition began.

During the hearing, justices questioned the powers of the president to unilaterally impose tariffs. The outcome of this case could impact world trade as well as oil prices in the long-term.

Analysts are also dissecting a recent New York Times report which stated that the Trump administration is mulling potential military strikes against Venezuela and seizing Venezuelan oil fields, although Trump is undecided on this matter.

According to the EIA, Venezuela has the largest proven oil reserves, estimated at at 303 billion barrels.

U.S. sanctions on major Russian oil producers, Rosneft and Lukoil, are starting to bite Russia. Rosneft and Lukoil produce around 50% of total Russian oil production.

China buys around 2 million barrels per day of Russian oil, while India takes 1.5 million barrels per day. Now both these nations are looking out for alternate suppliers.

Last week, U.S. Federal Reserve Chair Jerome Powell advised not to consider a rate cut in December as a foregone conclusion.

A low-interest environment encourages brisk industrial activity and increases energy consumption which is a support for oil prices.