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Crude oil prices drop in Europe on larger inventories in the USA

October 27/2021

MOSCOW (MRC) -- Crude oil prices reached a ceiling during morning trade in Europe Oct. 27, dropping from bullish fundamentals after the US reported a larger-than-expected stock build, reported S&P Global.

At 10:07 AM (0907 GMT) London time, the ICE December Brent futures contract was USD1.15/b (1.33%) lower from the previous close at USD85.25/b, while the NYMEX December light sweet crude contract was USD1.48/b (1.75%) lower at USD83.17/b.

"This morning, the energy complex is succumbing to negative pressures following a bearish API report concerning US oil stocks," Stephen Brennock of PVM Oil Associates said Oct. 27.

A larger-than-expected stock build showed US crude inventories increasing 2.3 million barrels for the week ended Oct. 15, according to API's weekly report on Oct. 26. The economists were, however, expecting a build of about 1.7 million barrels.

The API data also showed that gasoline inventories rose 530,000 barrels last week, and distillate stocks increased 986,000 barrels.

"Analysts suggest the prices are starting to look overbought and investor profit taking is largely expected," one analyst said Oct. 27.

However, some analysts continue to cite the bullish nature of the complex as a cautious increase in OPEC+ oil production tilts the supply-demand balance.

"Oil companies in western countries are under pressure to lower their carbon emissions, which will doubtless make them less keen to invest in fossil fuels such as oil," Carsten Fritsch of Commerzbank said.

As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.

We remind that 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 also 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:Europe, crude and gaz condensate, petrochemistry, USA.
Category:General News
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