Crude oil prices lower in futures on inventory concerns

At around 0300 GMT, United States benchmark West Texas Intermediate (WTI) for January delivery was down 84 cents at Dollars 41.06 while Brent crude for January was 51 cents lower at USD 44.15.

Prices seemed to be recovering from the lows in March until about June.

The overhang has seen Iraqi crude grades selling as low as $30 per barrel, while official selling prices from Nigeria have fallen to their lowest in more than a decade.

“The Saudi statement doesn’t signal a policy shift, but there are so many short positions out there, which is making the market very sensitive”, Michael Corcelli, chief investment officer of hedge fund Alexander Alternative Capital in Miami, said by phone. This production was exported largely to Asia and India.

Developing-nation currencies strengthened against the dollar after Fed Chair Janet Yellen said in a letter released Monday in Washington that she expects monetary policy will be tightened “gradually” after an initial increase.

However, the slowdown in Chinese economy is forecast to continue in the long term, Evans-Pritchard said. This would further glut the oil market, resulting in pricing pressure on crude.

Thomas Pugh, a commodities economist at London-based Capital Economics, said he remains hopeful that demand will pick up.

“The overarching concern in this market is the growing inventory levels for crude, and that doesn’t seem to be easing despite the strong refinery runs we’ve been having”, said Phil Flynn, analyst at the Price Futures Group in Chicago.

Crude oil futures lost ground in early Asian trading on Monday, pressured by a global supply surplus despite a cut in the number of USA oil rigs for an eleventh week out of 12, CNBC reported.

“The downturn is at 400 days and counting, well over double the previous downturn in December 2008 which was about 150 days”, Deloitte Australia’s national director, oil and gas, Geoffrey Cann, told the Queensland Petroleum and Exploration Association on November 10.

Oil prices have halved over the last 12 months after OPEC made a decision to maintain its production levels, or even increase them, to retain market share, in part by forcing higher-cost producers elsewhere to cut output.

The oil industry awaits the biannual meeting of the cartel that will be held in Vienna on December 4.

The Saudis are joined by rich neighbors like Qatar, Kuwait and the United Arab Emirates. Global supply and demand is best balanced by the market, Russian Energy Minister Alexander Novak said Saturday in Tehran.