EIA’s supply glut hampers crude again – never buck the trend is the recommendation

Crude oil prices at the outset went under pressure following yesterday's EIA's inventory data.

Brent dropped to $43.5 per barrel while WTI cost less than $40 per barrel for the first time since the end of August. Prices recouped their losses in the later course of trading, however. The ample supply situation should prevent prices from climbing any higher.

According to the US Department of Energy, US crude oil stocks grew by 252,000 barrels last week that was less than expected, and indeed the smallest increase in the last eight weeks.

The significantly less pronounced inventory build as compared with the previous week was due to lower imports and a higher rate of crude oil processing.

Crude oil stocks at Cushing rose by 1.5 million barrels, which is a sharper increase than anticipated but one which tallies nonetheless with the API survey.

The ongoing robust level of crude oil production is likely to have played its part in this, having fallen only slightly week-on-week and still remaining only just below a three-month high.

On NYME, WTI crude futures for delivery in December rose up to $41.55 a barrel.

WTI crude oil futures (CL!1) extended losses from last week's close at 40.74 to 40.06, but that was the time when bulls became alert to push the prices higher to current levels.

Global oil production is outpacing demand following a boom in U.S. shale oil output and after a decision by the Organization of Petroleum Exporting Countries (OPEC) last year not to cut their supply quota.

According to recent estimates, OPEC mined approx 31.54 million barrels a day in last month, close to record-highs, as major producers led by UAE focused on defending market share by keeping production high. As the oil prices have an impact on worldwide economy, some volatility for the currencies, especially for the CAD is anticipated.