WASHINGTON (dpa-AFX) - Crude oil tumbled on Wednesday after yesterday's surge, with various data points reinforcing oversupply concerns. Reports the U.S. is renewing its efforts to end the Russia-Ukraine war also weighed on oil prices, as a ceasefire could allow the free flow of Russian oil into the market.
WTI Crude Oil for December delivery was last seen trading down by $1.22 (or 2.01%) at $59.52 per barrel.
On the inventory front, according to Tuesday's data from the American Petroleum Institute, crude oil inventories in the U.S. increased by 4.4 million barrels in the week ending November 14 following a 1.3 million-barrel build the previous week. This third straight weekly build in crude inventories suggests the U.S. is adequately stocked for the year.
However, the U.S. Energy Information Administration reported a pullback by U.S. crude oil inventories.
The EIA said crude oil inventories in the U.S. slid by 3.426 million barrels for the week ending November 14, more than market expectations of a 0.6 million decrease. At 424.2 million barrels, U.S. crude oil inventories are about 5% below the five-year average for this time of year.
For the same period, while gasoline and distillate inventories (which includes heating oil and diesel) rose by 2.3 million barrels and 0.2 million barrels respectively, heating oil inventories alone dropped by 0.5 million barrels.
The International Energy Agency has already warned that the oil glut in 2026 could be worse than expected.
Further, a new oil market outlook from Goldman Sachs projects approximately a 2 million barrels per day global surplus in 2026.
According to a Reuter's report based on new customs and production data, China (the world's biggest crude importer) has multiplied both strategic and commercial stocks utilizing the recent bearish trend. China's surplus crude oil reached about 690,000 barrels per day in October, up from about 570,000 bpd in September.
Even as U.S. sanctions on two Russian oil majors, Rosneft and Lukoil, are set to take effect from November 21, the sanctions are already starting to show the impact on Russia's revenue.
Despite facing sanctions from the U.S. and the west (which were intended to force Russia to halt its war against Ukraine) in an overnight attack, Russia fired 470 drones and 48 missiles at various Ukrainian targets.
U.S. President Donald Trump's administration is now working with Russia on a 28-point peace plan to end the Russia-Ukraine war. As of now, Ukraine is not involved directly, although Ukrainian officials confirmed receiving 'signals of U.S. proposal.'
According to Kpler data, Russia's overall shipments across all destinations decreased by 28% to 2.78 million bpd in November so far. Approximately, 50% of loaded tankers are travelling without a precise unloadable destination searching for buyers.
Deliveries to the three major Russian oil purchasers China, India, and Turkey have decreased considerably by 47%, 66%, and Turkey 87% respectively.
Russia is compelled to offer its oil at discounted prices.
In the U.S., the minutes of last month's Federal Reserve's meeting are widely anticipated by traders to know more about the central bank's assessment of the national economy against the backdrop of tariffs and the recent historically long shutdown.
The Fed's decision next month could impact the U.S. dollar and consequently affect oil prices in the short-term, as oil is a dollar-driven commodity.
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