Crude oil futures decline to Rs. 2695 per barrel

“We see U.S. stocks rising to a potential new record high in the fourth quarter, unless of course production starts falling fast”, Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd.in London, said in a report.

Advertisement

More than half of the losses for the day came in just 15 minutes after the U.S. Energy Information Administration released its official data on oil stockpiles. At the Cushing Oil Hub in Oklahoma, the main delivery point for NYMEX crude oil, inventories increased by 300,000 barrels for the week. Angola plans to ship 1.83 million barrels a day in October, the most since November 2011, according to a preliminary loading program obtained by Bloomberg.

The Brent crude futures, the global oil benchmark, were down 75 cents at $46.41 a barrel, still some way off their 2015 low of $45.19 traded in January.

Higher-than-expected oil inventories and new price projections spooked energy investors.

“As we go into the next couple of months, crude oil demand is going to decline, which worries the market“, Andy Lipow, head of Houston consultancy Lipow Oil Associates, said.

“While this is a clear sign that low prices will lead to less production, it was not enough to convince people yesterday”, Commerzbank senior oil analyst Carsten Fritsch said. OPEC’s biggest producer is pumping oil at full capacity, leading to a glut in the market. “It will take another few years before demand surpasses supply – all else being equal – though of course prices may react before then”.

U.S. crude futures were trading at $42.37 per barrel at 0040 GMT, down 25 cents from their last settlement. Analysts announced that some traders had also be squaring short positions following recent drops in prices.

The latest Federal Reserve meeting highlighted concern over the state of the global economy, driving markets to question the likelihood that the Fed will raise rates next month.

The economy slowed down in China and sluggishness in Japan market have further eased oil demand.

Advertisement

Underscoring the bearish sentiment, hedge funds cut their net long holdings of Brent crude futures for a fourth straight week, exchange data showed on Monday.

Oil plunged Wednesday after a report showed U.S. crude stockpiles were higher than traders expected