Oil prices were all over the chart on Wednesday, November 17, as negative data battled optimistic words. Look out for more days of this war as we get closer to the November 30 meeting of OPEC that is supposed to result (but might not) in an agreement to significantly reduce oil production in order to support oil prices.
U.S. benchmark West Texas Intermediate started the pre-New York day as low as $45.71 a barrel at 7:04 a.m. New York time, climbed to $46.92 by 10:43 a.m. and then retreated to close at $45.57 a barrel on the New York Mercantile Exchange, essentially completing the round trip from the 7 a.m price. This followed Tuesday’s gain of 5.8%, the biggest increase since April 8,
Downward pressure during the day came from data from the U.S. Energy Information Administration showing that U.S. stock piles had climbed by 5.27 million barrels last week. Oil industry analysts had predicted a gain of 1.5 million barrels. The bad news on stockpiles was mitigated to a degree by numbers that showed refiners using 16.1 million barrels a day, 309,000 more than in the prior week.
But the bigger news pushing oil prices up came from comments by Russian Energy Minister Alexander Novak who said that Russia is ready to support an OPEC decision to reduce production in order to stabilize the market. There’s nothing new in Novak’s comments but oil traders genuinely don’t know what OPEC will or will not achieve at its November 30 meeting. The odds don’t look good for the organization to deliver significant production cuts since Iraq, Nigeria, Libya, and Iran are all lobbying for exemption from the reductions. But traders also know that if OPEC does pull an agreement out of its hat, oil will rally very strongly. And no trader wants to get very far ahead of that possibility.
The increase in U.S. inventories left crude supplest at 490.3 million barrels, the highest seasonal level of stockpiles in more than 30 years.