Crude Steady But Oversupply Remains Key Concern

Oil prices haven’t been able to make up any of Tuesday’s losses. Crude is little changed helped by a marginal decline in the greenback with WTI at $72.29/bbl and Brent $77.22.

• Oversupply remains a key concern for the market with US crude exports expected to reach a record high and continued scepticism that OPEC’s output will be cut as announced last week.
• Bloomberg reported that US crude stocks rose 594k barrels in the latest week, according to people familiar with the API data. Gasoline rose 2.8mn and distillate 1.9mn. The official EIA data is released later today.
• Prices are down around 7% since OPEC but technical measures are suggesting that crude could be oversold and it may also be impacted by declining liquidity, according to Bloomberg. The Russians have been trying to support the market with Deputy PM Novak saying that OPEC could do more if last week’s decision is not enough to stabilise prices. He and President Putin will travel to Saudi Arabia and the UAE this week.
• Venezuela is posing further risks as it is granting licenses to extract oil in a disputed region of Guyana and has warned foreign oil companies to leave. It also hasn’t released US prisoners as agreed. Both actions risk the cancellation of licenses granted by the US in October.
• Ahead of Friday’s US payroll report, ADP employment prints today and is expected to be slightly higher at 130k. There are also the October trade balance and final Q3 productivity/ULC. The Bank of Canada meets and is expected to be on hold.