Oil prices under pressure after renewed sharp rise in US crude oil stocks

Oil prices are continuing to fall this morning, Brent is nearing the $48 per barrel mark and WTI is trading below $46 per barrel. Another sharp rise in US crude oil stocks put prices under pressure overnight. According to the API, they increased by 7.1 million barrels last week, whereas an inventory build of a "mere" 3.7 million barrels had been anticipated. 

Following their heavy losses the day before, oil prices attempted a recovery movement yesterday, though it soon proved to be in vain. Brent closed trading largely unchanged at $48.7 per barrel, while WTI dropped by nearly 1% to $46.3 per barrel on the last day before the contract rollover. 

Any more sustained price recovery would require clear signs that US crude oil production is continuing to fall. According to the last inventory report, it totalled just short of 9.1 million barrels per day. 

"Prices would be given a boost if it were to dip below the 9 million barrel per day mark, as the US Energy Information Administration does not expect this to happen until early 2016", says Commerzbank.

Refineries in the US are processing less crude oil because of ongoing maintenance work, which is driving up stocks. Moreover, the much tighter crack spreads make crude oil processing less attractive and are likely to exacerbate this trend. 

This leads to decreasing stocks of oil products, however, which should lend support to oil prices in the mid-term. The US Department of Energy will be publishing the official inventory data this afternoon. A sharp rise in crude oil stocks should be priced in by now and no longer weigh additionally on prices.