Oil is at its lowest since early October and continues to decline

Oil is at its lowest since early October and continues to decline

 

Oil ended Wednesday's trading at its lowest level since early October and continues to decline.

 

The market continues to react to news that the administration of U.S. President Joe Biden is considering selling oil from the strategic reserve. At the same time during the virtual summit with Chinese President Xi Jinping the possibility of a similar step by China was discussed.

 

Even the data on reduction of oil reserves in the U.S. last week did not support the oil market, MarketWatch notes.

 

Despite the upbeat DOE report, "the market reacted negatively as it assessed the potential response from the Biden administration," said Manish Raj, CFO of Velandera Energy Partners. "The Biden administration has made clear its desire for lower oil prices, and the market is assessing what it can do to rein in prices given the very limited number of tools in its arsenal," he believes.

 

January Brent crude futures on London's ICE Futures exchange had fallen $0.28 (0.35%) to $80 a barrel by 9:05 a.m. On Wednesday they fell by $2.15 (2.6%) to settle at $80.28 a barrel by closing time, the lowest level since October 7.

 

WTI December futures quotations fell by $0.67 to $77.69 per barrel at NYMEX in the morning. The previous session saw them plummet $2.4, or 3%, to end the day at $78.35 a barrel, the lowest since October 1.

 

Last week crude oil inventories in the USA fell by 2.1 mln barrels to 433 mln barrels, said the Energy Department of the country. Gasoline reserves fell by 707,000 barrels and distillates by 824,000 barrels.

 

Experts polled by S&P Global Platts, on average, predicted a decrease in oil reserves by 2.5 million barrels, gasoline - by 100 thousand barrels, distillates - by 1.3 million barrels.