- WTI crude oil falls to $76.50 per barrel, down 2.14%, following a larger-than-expected build in US crude inventories and record production levels.
- Economic contraction in Japan and negative data from the Eurozone raise concerns over potential declines in oil demand.
- Despite downward pressure, OPEC+ production cuts and positive economic indicators from China support oil prices.
WTI drops on Wednesday, late in the New York session, after data from the US suggested a build on crude oil inventories amid record production and worries of dented oil demand in Asia. WTI is trading at $76.50 per barrel, down 2.14%.
WTI price pressured by record inventory build in the US, weak economic data from Asia
Data from the US Energy Information Administration (EIA), revealed an inventory build of 3.6 million barrels, reaching 421.9 million last week. A Reuters poll anticipated a build of 1.8 million barrels, though the report suggests a notable build-up of crude stockpiles in the United States.
The data showed that US domestic crude production stayed at a record 13.2 million barrels per day.
Sources cited by Reuters commented the increase in oil production in the US is a “headwind for the market, and the U.S. is a problem for OPEC+.” WTI has extended its fall from around its weekly high of $79.72, witnessing a $3.50 drop, also weighed by weak economic data from Japan.
Japan’s economy shrank in Q3, snapped two consecutive quarters of expansion spurred by weak exports and domestic consumption.
Even though the Organization of Petroleum Exporting Countries and its allies (OPEC+) have an optimistic outlook for oil demand, recent data from the Eurozone printing negative readings, along with Japan’s economic contraction, risks for a diminish of demand looms.
Therefore, WTI prices would be under pressure, but Saudia Arabia and Russia’s pledge to cut production by 1.3 million barrels toward the end of the year, cushioned oil´s drop.
Latest data in China painted a more upbeat economic outlook, as industrial production grew faster than expected, while retail sales, beat estimates.
WTI Technical Levels