WASHINGTON (dpa-AFX) - Crude oil fell sharply on Wednesday as concerns of excess supply surfaced due to both reported plans by the OPEC+ alliance hiking output larger than before in November as well as Iraqi oil exports from the Kurdistan region to Turkey that commenced last Saturday.
WTI Crude Oil for November delivery was last seen trading down by $0.60 (or 0.96%) at $61.77 per barrel.
The OPEC+ alliance is reportedly planning to increase production by anywhere from 274,000 to 411,000 bpd in November. As the numbers are two to three times greater than October's increase, concerns of oversupply have surfaced.
Bloomberg News reported that the cartel may accelerate production by as much as 500,000 bpd. However, OPEC has rejected the report, calling it 'inaccurate and misleading.'
On Saturday, after a hiatus of nearly two-and-a-half years, Iraq exported crude oil from the semi-autonomous Kurdistan region in northern Iraq to Turkey via a pipeline.
Meanwhile in Europe, after last week's Ukrainian drone attacks on Russia targeting major oil refineries led to Russia curbing its oil exports, Russia conducted a big-sized aerial attack on Ukraine with drones and missiles. Ukraine has requested U.S. military assistance.
U.S. Vice President JD Vance has responded by stating U.S. President Donald Trump would take a final call.
After recent European airspace violations by Russia, European leaders have come together with plans to build a 'drone wall' to protect the continent from any such future incursion by Russia.
Traders feel that Russia's continuous rejection of peace proposals to end its war with Ukraine may result in heavy sanctions by the U.S. and the West on its billion-dollar oil exports, affecting the supply chain.
Israel has come up with a U.S.-backed peace proposal to end the Israel-Palestinian war. However, the stance of Hamas is unclear even while Israel warned that if Hamas rejects the proposal, Israel will have its way.
Oil transit will become more safer if peace returns to Gaza as it would remove a substantial risk premium.
In addition, the U.S. government has entered a shutdown after Republicans and Democrats failed to reach a deal to approve a short-term funding bill that would have allowed the government to continue to function. With lots of workers to go out of job, concerns have risen about the consequent increase in unemployment.
Economists are concerned that a prolonged halt in administrative activities due to a lack of employees could soften the consumption and demand for oil and energy and hence weigh on oil prices.
Bank of America estimates that each week of shutdown could trim U.S. GDP by 0.1 percentage point.
In addition, the shutdown deprives markets of the official data that guide trading. Without jobs and inflation reports, oil markets may struggle to calibrate demand growth expectations.
Data released by the American Petroleum Institute revealed that U.S. crude oil inventories dropped by 3.674 million barrels for the week ending September 26, following a 3.821-million-barrel decline in the previous week.
For the week ending September 26, the U.S. Energy Information Administration data revealed today an increases in crude oil stocks by 1.79 million barrels, gasoline stocks by 4.125 million barrels, distillate stocks by 578,000 barrels, and heating oil stocks by 187,000 barrels.
Separately, ADP data for jobs today showed that private businesses in the U.S. cut 32,000 jobs in September, defying forecasts of a 50,000 increase.
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