Oil prices fall 4 percent on news of oversupply

Key market uncertainties include the pace and volume at which Iranian oil reenters the market, the strength of oil consumption growth, and the responsiveness of non-OPEC production to low oil prices.

Crude oil prices fell on Wednesday after industry data showed an increase in USA stockpiles, and as analysts said that US output had been surprisingly resilient in the face of lower prices. In last two trading days, it lost almost 7%. Both benchmarks fell to their lowest level since end of August on Thursday. The growing oil stockpiles triggered a drop of ten percent in prices since the starting of November. The EconoTimes content received through this service is the intellectual property of EconoTimes or its third party suppliers.

There are also signs that traders are preparing for more price falls this year and into 2016, with the number of options taken to sell crude futures if prices fall to $40 or even $25 a barrel between December 2015 and June 2016 soaring over the past month.

Crude prices have fallen more than 45% over the previous year since OPEC roiled global markets with its decision to leave its production ceiling above 30 million barrels per day in an effort to maintain market share.

CORRECTION: This article has been updated to reflect that the EIA will release oil inventories data Thursday.

Brent was off 36 cents, or almost 1 percent, at $43.68 a barrel, its downside limited by the impending expiry of its front month December contract at Friday’s settlement. While it has peaked in April at 9.6 million barrels a day, production in the US has recently stabilized.

“But OPEC also said its output could result in a 560,000-barrel-per-day surplus by 2016 if it keeps pumping at October’s rate of 31.38 million bpd.”(OPEC is) trying to put a positive spin on it by saying the decline in prices will encourage a few demand, but they’re also saying the reason for the drop in the first place is because supply is still outstripping demand”, said CMC Markets analyst Jasper Lawler. The oil market is also looking for any indicators from the Organization of the Petroleum Exporting Countries (OPEC) over its production policy.

“You can talk all you want about oil demand being better next year and beyond, but right now we have a heck of a glut on our hands that I think has to be priced in a few more”, said John Kilduff, partner at NY energy hedge fund Again Capital.