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Crude oil futures retreat in Europe amid profit-taking, stronger US dollar and unexpectedly higher US inventories

September 29/2021

MOSCOW (MRC) -- Oil futures softened during mid-day trading in Europe Sept. 29 on the back of profit-taking, a stronger US dollar and an unexpected increase in US crude inventories, reported S&P Global.

At 1100 GMT, November ICE Brent futures were down 41 cents/b to USD78.68/b, while November NYMEX WTI futures lost 39 cents/b at USD74.90/b.

"Market observers attribute the price slide to profit-taking following the price surge beforehand. What is more, concerns are growing that rationing of electricity in China could put the brakes on industry there, and thus by extension on demand for oil and gas," said Carsten Fritsch, analyst energy, agriculture, precious metals at Commerzbank.

Meanwhile, a stronger US dollar may have placed additional pressure on the market, with the US dollar index (DXY) up 0.08% to 93.84 at 1100 GMT. A stronger dollar increases the relative expense of oil for buyers with non-US dollar currency, weakening demand.

Adding to the bearish sentiment was data from the American Petroleum Institute released Sept. 28, which showed US crude inventories unexpectedly increasing by 4.1 million barrels during the week ending Sept. 24.

The API report also showed gasoline inventories rising by nearly 3.6 million barrels and distillate stocks jumping by 2.5 million barrels. The market will now await the report by the US Energy Information Administration, due for publication Sept. 29, to draw more definitive conclusions. Should the EIA data correspond with the API figures, it would mark the first rise in crude inventories in eight weeks.

Market participants are now focused on the upcoming meeting of OPEC+ oil ministers scheduled next week, with expectations of an increase in production levels beyond the previously agreed 4 million b/d.

As MRC informed earlier in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.

We remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
Author:Margaret Volkova
Tags:Asia, Europe, crude and gaz condensate, petrochemistry, China, USA.
Category:General News
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