Oil edges up on short-covering

For the past week, crude imports averaged about 7 million barrels a day, down by 409,000 barrels a day compared with the previous week. The data was expected to show that crude inventories rose by 1.9 million barrels last week.

“So, oil prices continue to remain depressed by the still-high supply of the stuff and weaker demand prospects”, he said.

Oil fell to near three-month lows and USA crude futures slipped to below US$40 a barrel before settling higher on Wednesday as short-covering lifted a market initially suppressed by worries about a global supply glut.

At around 0600 GMT, USA benchmark West Texas Intermediate (WTI) for delivery in December was down six cents to US$41.68, reversing gains in the morning.

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“Yesterday’s rally was a reaction to the likely increase in geopolitical risk despite the fact Syria itself is not big oil producer”, said Pete Donovan, broker at New York’s Liquidity Energy.

The sharp decline in oil sector investment, which is predicted by the worldwide Energy Agency (IEA), will be result of the problems regarding storage of excess oil, aimed at avoiding a complete collapse in oil prices, expert Sam Barden believes.

It pointed out in a commentary that the global market remains oversupplied, crude inventories in developed countries are at record levels and there is no direct threat to Middle East oil facilities and transit points.

The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, rose 0.1% Tuesday on expectations that the Federal Reserve is due to raise interest rates in December. The price of crude fell by more than four percent since the report, sinking below $45 for the first time since August.

Still as oil prices have cratered since mid-2014, American producers have pulled shuttered or mothballed 1,161 rigs in the U.S over the last 12 months as the cost of production largely no longer justify keeping them active. Year to date, Exxon stock traded down about 13% and is down about 17% since early November of 2014, as of Wednesday’s close.

Data released by the Energy Information Administration revealed that last week, crude inventories in the United States increased by 252,000 barrels to 487.3 million barrels.

In a rough week for oil, we finally saw the bull rocked by the revelation of oversupply that was produced when the glut of USA oil inventories shot up by an unexpected 4.2M barrels this past week (which was somewhat better than the earlier API estimate of a 6.3M surplus). Instead, a much scarier specter is haunting the oil markets: that of global storage [facilities] topping out….