Oil prices dipped on Nov. 22 after U.S. inventories swelled to their highest level since December adding to concerns about a global crude glut but OPEC talk of an output cut limited losses.
Benchmark Brent had fallen 10 cents to $63.32 a barrel by 1447 GMT, partially recovering from a more than $1 drop in early European trading. U.S. WTI fell more than a $1 before easing back to trade down 28 cents at $54.35.
Trading was thin due to the Thanksgiving holiday in the United States.
UBS analyst Giovanni Staunovo said oil was helped off its lows by a weaker U.S. dollar, making dollar-denominated crude cheaper for holders of other currencies. "Additional support has probably come from lower Iranian exports," he said.
Iran's exports have dropped by several hundred thousand barrels per day (bbl/d) this month, a leading tanker-tracking company said on Nov. 22, suggesting U.S. sanctions that kicked in this month have scared off many buyers.
But prices remain under pressure from rising U.S. crude inventories, which climbed by 4.9 MMbbl to 446.91 MMbbl last week, their highest since December, the U.S. Energy Information Administration (EIA) said.
U.S. crude oil production also stayed at a record 11.7 MMbbl/d, the EIA said.
Tamas Varga, analyst at PVM brokerage, said the market trend remained bearish. "The question is what OPEC will do in December, will they cut, and if so, by how much?" he said.
The Organization of the Petroleum Exporting Countries is worried about the emergence of a glut. But OPEC's biggest exporter Saudi Arabia is under U.S. pressure not to take any action on cutting output that would push prices higher again.
"Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy!... Thank you to Saudi Arabia, but let's go lower!" U.S. President Donald Trump tweeted on Nov. 21.
More U.S. crude could be heading to market as U.S. pipeline bottlenecks are cleared in the second half of 2019. Rising U.S. oil output has outpaced capacity to transport the extra crude.
To counter the surge in supply, OPEC is considering a deal to cut production when it meets on Dec. 6, although OPEC member Iran is expected to resist any voluntary reduction. Russia, an ally of OPEC, has also shown no sign it would join any cut.
Recommended Reading
Russia Orders Companies to Cut Oil Output to Meet OPEC+ Target
2024-03-25 - Russia plans to gradually ease the export cuts and focus on only reducing output.
EIA: Blame Associated Gas Volumes for Sticky Low NatGas Prices
2024-03-14 - Low natural gas prices are forcing U.S. producers to finally pump the brakes on what has been record production. But the pullback in drilling will have muted effects on a market already glutted with too much gas, federal experts say.
US Gulf Coast Heavy Crude Oil Prices Firm as Supplies Tighten
2024-04-10 - Pushing up heavy crude prices are falling oil exports from Mexico, the potential for resumption of sanctions on Venezuelan crude, the imminent startup of a Canadian pipeline and continued output cuts by OPEC+.
What's Affecting Oil Prices This Week? (Feb. 26, 2024)
2024-02-26 - Stratas Advisors forecast that global crude production will be essentially unchanged from 2023, which means that demand growth in 2024 will outpace supply growth.
What's Affecting Oil Prices This Week? (April 1, 2024)
2024-04-01 - Stratas Advisors forecasts that OPEC+ will continue to manage supply in a proactive manner while non-OPEC supply growth is expected to be more modest during 2024 and 2025 than seen in 2023.