Crude oil futures drifted lower during mid-morning trade in Asia Nov. 3 amid reports of a large build in US oil inventories last week, while investors remained cautious ahead of the Nov. 4 OPEC+ meeting.
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At 10:20 am Singapore time (0220 GMT), the ICE January Brent futures contract was down $1.33/b (1.56%) from the previous close at $83.39/b, while the NYMEX December light sweet crude contract fell $1.54/b (1.84%) at $82.37/b.
"The rally in oil prices took a pause overnight," IG market strategist Yeap Jun Rong said in a note.
"It seems that as the OPEC+ meeting nears, more pressure from countries, such as the US and Japan, to boost production are putting some risk sentiments for oil prices on hold, alongside the much higher-than-expected rise in API crude inventories overnight," Yeap added.
The American Petroleum Institute data out late Nov. 2 showed a 3.6 million barrel build in US crude oil stocks in the week ended Oct. 29.
If confirmed by data from the US Energy Information Administration out later Nov. 3, crude oil inventories would have risen for five of the last six weeks, indicating that demand is not recovering as quickly as expected, industry sources said.
Gasoline inventories, meanwhile, fell 552,000 barrels, while distillate stocks climbed 573,000 barrels, the API data showed.
Nonetheless, calls have been growing for the OPEC+ group to raise production beyond the scheduled 400,000 b/d per month when they convene on Nov. 4. Key oil-consuming countries including the US, Japan and India have pressured the group to temper oil prices that have surged amid a global gas crisis, outages and a lack of oil investments due to climate change pledges.
Recent public comments from OPEC members, however, showed they are unlikely to budge. Kuwait's oil minister said Nov. 1 he supports the OPEC+ group's planned 400,000 b/d monthly crude output hike, while Saudi Arabia's energy minister Prince Abdulaziz bin Salman said Oct. 20 he saw no evidence of a crude shortage.
Most analysts expect the group to stand pat on their scheduled increases when the meeting concludes.
"We would expect noise from key consumers to increase over the remainder of the week, given that OPEC+ will be holding their regular monthly meeting on Nov. 4," ING analysts Warren Patterson and Wenyu Yao said in a note earlier this week.
"For now, it looks as though the group will try to resist being more aggressive in its easing plan and stick to increasing output by 400,000 b/d per month."
OCBC Treasury Research analysts said they expect Brent crude futures to stay rangebound between $80-$85/b in the interim.
"The oil market is understandably cautious given the OPEC+ meeting tomorrow as well as the FOMC [US Federal Open Market Committee] meeting tonight. We expect Brent to continue hovering around $80-$85 in the near term," they said.