Brent Price Still Stifled By Oversupply
Brent crude oil made its way toward $105 on Wednesday morning after falling to a nine-month low on Tuesday as soft global demand weighed on prices. The commodity traded at $104.82 at 6:20 GMT following the release of U.S. inventory data, which showed a larger than expected drop.
The American Petroleum Institute released a report showing that U.S. crude inventories had fallen 5.5 million barrels last week, compared to analysts’ expectations of a 1.7 million-barrel drop. Now, all eyes are on the Energy Information Administration’s version of the report, due out Wednesday.
Though U.S. economic data this week has been pointing to stronger demand in the number one oil-consuming nation, it hasn’t been enough to convince markets that global demand will increase enough to cover the current oversupply. With China still struggling and the Eurozone’s recovery losing momentum, many see supply outpacing demand for some time in the future.
Related Link: Brent Steady As Geopolitical Worry Weighs In
Meanwhile, Brent has been relatively unaffected by instability across the globe even as conflicts in the Middle East, Africa and Eastern Europe continue to worsen. CNBC reported that Moscow announced that it was planning to help Iran sell its crude, but withdrew the statement quickly afterward. Both Russian and Iranian oil exports are heavily sanctioned by the West, keeping some of their crude from the market.
Also troubling is the spiraling conflict in Iraq, where Islamist militants are expanding their stronghold in the north of the country. On Tuesday, Iranian officials said they are working to find a new leader for Iraq, as they believe current Prime Minister Nouri al-Maliki is unable to deal effectively with the uprising.
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