Oil stable, but tense as OPEC cuts, waning demand clash with US oversupply

Oil markets continue to trade tightly near medium-term lows, with WTI constrained just beneath the $57.00 level as energy investors grapple with inbound threats from OPEC to slash oil production across the board, and crude bidders are struggling to rectify their global outlook, with the US continuing to stash light sweet crude wherever they can fit it.

US crude supply stocks reported their largest weekly build-up in over two years, with the Energy Information Administration (EIA) stating that the US reached yet another new milestone in production, clipping into 11.7 million barrels per day getting pulled out of the ground, and crude inventories showed a similar build-up, adding 10.3 million barrels to see 442.1 million crude barrels in supply, the highest barrel count since December of last year.

OPEC is warning that they will begin cutting production of crude as soon as December, with some estimates reaching over a million bpd they intend to restrict, but as noted by analysts at Morgan Stanley, OPEC crude and US crude are two different animals, and a decline in Middle East oil supply may not mean much for light sweet crude markets: "The main oil price benchmarks - Brent and WTI - are both light-sweet crudes and reflect this glut; OPEC production cuts are usually implemented by removing medium and heavier barrels from the market but that does not address the oversupply of light-sweet. OPEC cuts are inherently temporary (because) all they can do is shift production from one period to another."

WTI Technical Levels