Oil slips as gloomy inventory data indicates a bear​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ish outlook

Prices surged at the start of the week on the prospect of further cuts from Opec+

The Opec+ alliance is said to be considering deeper cuts to control inventory levels. Reuters
Powered by automated translation

Oil traded lower on Wednesday as high US inventory build-up and reaction to bearish industry reports weighed down prices.

Brent was trading at $59.43, down 0.45 per cent at 11.53am UAE time, while West Texas Intermediate, the benchmark tracking largely North American crude grades, was up 1.59 per cent at $54.16 per barrel.

Data from the industry-funded American Petroleum Institute on Tuesday showed US crude inventory levels rose by 4.5 million barrels to 437 million barrels for the week ending October 18, beating analysts' estimates by 2.2 million barrels.

The US Energy Information Administration (EIA) is also expected to release its inventory report later today.

The gloomy stock outlook levelled prices, which surged on Tuesday following indications that the Opec+ alliance could be considering deeper cuts to balance the markets.

The alliance, led by Saudi Arabia and Russia, has been cutting 1.2 million barrels per day since the beginning of the year. The pact is expected to hold until next March. The producers will meet in Vienna in early December. Opec's de facto leader Saudi Arabia, meanwhile, wants to keep the group's focus on adherence to existing pledges, before introducing the prospect of deeper cuts, according to Reuters.

Compliance within Opec+ remains challenging with Russia missing its pledge for the month of September.

Russian President Vladimir Putin, in a visit to Riyadh last week, called for a reduction of global inventories to reasonable levels, indicating Moscow was on board for future cuts.

JBC Energy, a consulting company, said in a note on Wednesday that bearishness would persist in the market.

"Broader markets have been lacking a bit of direction as incoming earnings from key S&P 500 members are generally surprising to the upside while the gloomy outlook for the next year remains in place," it said.