Oil prices fell to their lowest levels since August under the weight of burgeoning US petroleum stocks and a stronger dollar. International benchmark Brent settled at just $44.06 per barrel Thursday, down a hefty $4.62/bbl on the week while US domestic price-pin West Texas Intermediate (WTI) shed $3.45/bbl to close at $41.75/bbl. Strong US diesel demand -which is attracting Russian cargoes from an oversupplied Europe -and rumored problems with a major Enbridge pipeline delivering crude into WTI’s Cushing, Oklahoma pricing point helped narrow the Brent-WTI spread. But there is no hiding from the market oversupply. The Energy Information Administration (EIA) reported US crude tanks rising by 4.2 million bbl to 487 million bbl in the week ending Nov. 6, with stocks at Cushing up by more than 2 million bbl to 55.4 million bbl. EIA data showed US domestic oil production rising to just under 9.2 million b/d with imports also higher after better weather allowed a backlog of cargoes to discharge in Houston. Opec’s latest monthly market report said that current production policies could result in a sizable supply surplus in 2016 despite low oil prices encouraging demand. The group expects non-Opec supply to fall by 130,000 b/d -as low oil prices begin to shut in marginal production -following growth of 720,000 b/d this year. Opec kingpin Saudi Arabia continues to market its crude in Northern Europe in direct competition with Russian exporters in the Baltics.
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