Crude oil is getting slammed

The API’s results – which often correlate closely with the EIA’s official figures out a day later – forecast that oil stockpiles in the U.S. rose by 6.3 million barrels in the week ended November 6th, well above the 1.1 million barrel increase that analysts polled by news agency the Wall Street Journal projected.

Brent was down $1.67 to $44.14 USA a barrel.

Inventories at Cushing, Oklahoma, the delivery point for the U.S. contracts, gained 2.24 million barrels to 55.3 million barrels.

“We’re awfully pummelled here today”, said Matt Smith of ClipperData.

OPEC’s second-largest producer, Iraq, plans to export 2.90 million bpd of Basra crude from its southern oil terminals in December, trade sources said on Friday.

High United States production has added to the abundant global supplies that have pushed prices down more than half since mid-2014.

“The evolving bearish global balances that we alluded to all year are acquiring increased transparency”, said Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch & Associates.

“If we breach the lower end of the trading range, we could open the trap door to break $40 in the days and weeks to come”.

The IEA anticipates demand growth under its “central scenario” to rise by an average of 900,000 barrels per day (BPD) annually until 2020, gradually reaching demand of 103.5 million barrels per day (MMBPD) in 2040 – up almost 13 MMBPD from 2014 levels. Futures touched $40.81, the lowest level since Aug 27.

“Saudi Arabia shows no sign of reversing its year-old policy to defend market share rather than price”, in the run-up to OPEC’s next meeting on December 4, the IEA said, despite the kingdom paying for low oil prices with a ballooning budget deficit.

And here is where the IEA must certainly be wrong – another five years of low oil prices would fully decimate the necessary capital expenditures required to develop new oil sources, collapsing supply.

Among the products, gasoline supplies fell by 2.1 million barrels, while distillate stockpiles rose 400,000 barrels last week, the EIA said.

Oil ministers from OPEC claim they need at least until next month to decide if this rebound is for real, or simply a temporary phenomenon.