Oil prices drop as focus is back on supply glut

Data from industry group the American Petroleum Institute (API) data showed US crude stocks rose by 2.6 million barrels in the week to November 20, more than double analysts’ expectations for an increase of 1.2 million barrels.

The United States Oil ETF (NYSEMKT: USO) traded down about 1.2%, at $13.17 in a 52-week range of $12.37 to $28.18.

The incident briefly sparked oil supply fears and sent crude prices surging overnight to 2-week highs.

Thomson ReutersA pumpjack brings oil to the surface in the Monterey ShaleSINGAPORE (Reuters) – Brent and U.S. crude oil futures traded almost flat on Thursday on light trading due to the U.S. Thanksgiving holiday.

Crude oil future prices fell Friday as the market remained anxious about a growing global glut after the US reported a buildup in its commercial crude inventories last week.

Brent for January settlement slipped 60 cents, or 1.3%, to end the session at $44.86 a barrel on the London- based ICE Futures Europe exchange.

On the New York Mercantile Exchange, platinum futures for January delivery fell 1 percent to US$835.80, while palladium futures for March delivery slid 0.2 percent to US$550.65 an ounce.

Crude oil prices are expected to remain low for years to come.

Stocks overcame an early stumble Tuesday and finished modestly higher as investors shook off concerns about heightened tensions in the Middle East and a drop in consumer confidence.

The dollar strengthened Friday and pressured commodities such as oil, which are priced in the US currency.

“Tensions are still playing a part in the whole oil landscape”.

In 2014, Saudi’s oil minister Ali al-Naimi made the statement that even if oil “goes down to $20” Saudi Arabia will not budge from its stand. Now after nearly a year, with OPEC ministers meeting coming up on December 4 in Austria, as the price is hovering at $45 a barrel (AU$62.56), many Saudi officials are trying to send out a different message. Stockpiles of distillate fuel, a category that includes diesel and heating oil, rose 1.05 million barrels to 141.4 million, the Energy Information Administration said.

The inventories data was followed by a report from oil field services firm Baker Hughes showing the number of USA oil drilling rigs in operation fell by nine to 555, indicating an easing of activity.

Global oil production is outpacing demand following a boom in USA shale oil production and after a decision by the Organization of Petroleum Exporting Countries a year ago not to cut production. On Monday, Nymex futures dipped 15 cents, or 0.36%. They are up 5.3 percent so far this week, but have plunged 8.7 percent since the beginning of the month.