Oil prices have declined today after the Energy Information Administration reported that oil supplies in the week before November 23 added 3.6 million barrels. This is compared with the construction of 4.9 million barrels a week earlier.
EIA data came after yesterday, the US Oil Institute reported an estimated stock growth of 3,453 million barrels, which did not fundamentally affect prices.
The EIA also said gas reserves last week dropped by 800,000 barrels, and supplies of distillation fuels added 2.6 million barrels. A week earlier, the agency estimated a drop of 1.3 million barrels in gasoline and a drop in stocks of distillates by 100,000 barrels.
Meanwhile, production will hit new highs, and this will continue with most estimates if oil prices are not rapidly declining. However, the likelihood of this occurrence is relatively low. OPEC will meet next week in Vienna to discuss a new round of manufacturing cuts, and most analysts expect that cuts will be agreed with Russia.
However, Morgan Stanley sees one of the 33% probability that the cartel fails or refuses to agree to a reduction in production. In that case, prices will definitely fall more, under the pressure of stupid economic outlook and fear of excessive oil supply. The argument against the reduction of production is quite simple: market share. No wonder some members of OPEC have already spoken against the cut, especially Libya, which said it expects an exception to any cuts.
Besides OPEC, oil market observers have seen the G20 meeting, where Russia may, but do not have to indicate clearly whether to join the cuts. Like last time, Moscow will be the decisive ally for a cartel if it decides to join a cut or divide the deal if it decides to sit.
Irina Slav for Oilprice.com
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