Oil prices spiked midweek when the US Energy Information Administration reported a large and unexpected draw in US crude tanks, but fell back again on a stronger dollar and growing skepticism about Opec’s ability to turn any agreement to limit production into action. Traders said oil is likely to remain in a sideways trading pattern leading up to Opec’s November meeting. Several make the point that even if Opec and Russia agree to production freezes or cuts, words on a page do not necessarily indicate actions taken. Oil prices spiked almost $1 per barrel Wednesday after government data showed a surprise 5.2 million bbl draw in US crude tanks in the week to Oct. 14. After six weeks of falls, US stocks are now at their lowest since January but analysts cautioned that they remain roughly 100 million above what was normal five to 10 years ago. Wednesday’s rally was short-lived, with traders still skeptical that the market has even begun the process of rebalancing: Opec supply keeps rising with huge output gains now being seen from Nigeria. US tanks may have fallen but inventories in the broader OECD have grown 77 million bbl since the end of the first quarter. International benchmark Brent ended the week at $51.38/bbl Thursday, down 65￠/bbl, while US price-pin WTI posted a modest 16￠/bbl gain as the new December contract settled at $50.63/bbl. 'Market forces are working,' Saudi Arabia’s Energy Minister Khalid al-Falih told last week’s Oil & Money conference in London, co-hosted by Energy Intelligence and the New York Times, but suggested the market could use a nudge to speed the final rebalancing process. He implied that Opec’s deal in Algiers is best understood as fine-tuning, with any action needing to be 'gentle' and could be a 'freeze or a small decline,' said al-Falih.
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