The EIA (US Energy Information Administration) released its inventory report at 10:30 AM ET. WTI crude oil prices rose around 0.4% at 11:31 AM ET from their last closing level.
Based on this report, crude oil inventories rose by 2.2 MMbbls (million barrels) for the week ended November 8. Reuters forecast a rise of 1.65 MMbbls. For the same week, the government data showed a rise of 1.861 MMbbls in gasoline inventories. However, the Reuters poll estimated a fall of 1.2 MMbbls.
Last week, the difference between US crude oil inventories and their five-year average (or the inventories spread) was unchanged at 3%. This might have supported crude oil futures despite a surprise buildup in gasoline inventories.
Furthermore, OPEC secretary general Mohammed Barkindo’s statement on US shale oil producers might have also supported oil prices. To learn more about the impact of inventories spread on oil prices, read Rising Inventories Spread Might Drag Oil Prices.
Rising unrest in Iraq
The ongoing social unrest in Iraq could be an important development for the global oil market. The EIA data indicates that among OPEC members, Iraq’s oil output is the highest after Saudi Arabia. Moreover, Iraq has the world’s fifth-largest proven crude oil reserves. Unrest in the region could pose a threat to the global oil supply.
Oil prices and the trade war
So far this month, US crude oil active futures have risen 5.4%. The optimism surrounding the US-China trade deal has supported oil prices. However, the recent development around the US-China trade deal might increase concerns for oil’s rise.
Last week, President Trump declined to roll back the existing tariffs. However, China wants the US to remove a portion of the existing tariffs. Please read Is Phase One of the US-China Trade Deal in Trouble? to learn more about the possible headwinds for the trade deal.
On November 13, the EIA released its Short-Term Energy Outlook (or STEO) report. The report outlined that crude oil prices are expected to trend lower in 2020 than in 2019. The report stated that “rising global oil inventories, particularly in the first half of next year.”
Moreover, the IEA (International Energy Agency) expected a similar trend in the global oil market. Oil’s oversupply situation is expected to persist in the first two quarters of next year, based on the IEA data.
According to the EIA, US net exports of crude oil and petroleum could reach 750,000 barrels per day in 2020. US oil supplies, coupled with a possible slowdown in the global growth rate, could impact oil prices. The United States Oil Fund LP (USO) tracks WTI crude oil futures and is sensitive to crude oil reports.