Crude oil prices lower in futures market

Brent, the global benchmark, recently traded down 35 cents, or 0.8%, to $44.12 a barrel on ICE Futures Europe.

However, the gains were marginal compared with falls over the last 18 months – Brent crude remains cheaper than it was last Wednesday. USA oil production is off its 9.6 million-barrel-a-day peak from April, but was still delivering about 9.1 million barrels a day in October, according to the US Energy Information Administration (EIA).

Research analyst Daniel Ang of Phillips Future’s believes that after the Paris attack and France’s retaliation with air strikes on Syria, the risk premium on oil is expected to increase. (Source: “Asia Tankers-VLCC rates to rebound but likely capped on too much tonnage”, HSN, November 2, 2015.) This is still much higher than the $20,000-per-day rates seen in recent years, which clearly nullifies the stockpiling accusations. But gains in demand have been outpaced by vigorous production from the Organisation of the Petroleum Exporting Countries, OPEC, and resilient non-OPEC supply, with Russian output at a post-Soviet record and likely to remain robust in 2016 as well. If US inventories forward prove last week as a supply outlier, the shift into a more sustainable trading range is all but certain.

“Amid this latest tragedy, the typical gainers seen in times of uncertainty and geopolitical tension have been moving higher, with crude oil, gold and treasuries all gaining”, said Joshua Mahony, Market Analyst at IG.

As mentioned, rising onshore crude oil storage levels are a broad global pattern now; they’re not specific to North America.

Low oil prices aren’t just problematic for higher-cost producers, said Olivier Jakob, managing director at consultants Petromatrix GmbH in Zug, Switzerland.

Friday’s devastating attacks on Paris, blamed on the Islamic State group, stirred expectations of a rise in the level of conflict in the Syria-Iraq region that a few fear could disrupt oil output.

The meltdown in the black commodity, he says was dragged down by persistent worries that a weaker global growth may prolong the current excess supply of crude oil.

Based on assessment by Energy Aspects Amreta Sean, “sentiment is very bearish at the moment, and this could be viewed as affecting demand, so prices of oil may drop further”.

The additional buying pressure may have helped support the slipping oil prices, which have been steadily declining as the global supply glut widens.

On Friday, Baker Hughes Inc. reported that the US oil-rig count rose by two to 574, the first increase in 11 weeks.