The price of oil fell on Wednesday following data from an industry organization displayed that U.S. crude reserves increased last week at a rate higher than originally projected, which bolstered panic that an international surplus remains without any reduction in intensity.
Daniel Ang, analyst at Phillip Futures, penned a note recently regarding the future of oil prices with respect to the global glut, “Net supply in the short term should still be in excess and thus brings us to believe that the current uptrend is unsustainable.” Major companies that bet on oil futures are investing in a manner that suggests they believe that the markets will continue to be oversupplied for two more years at the least.
Sources within storage firms and trading companies have indicated that investors are seeking to lengthen or obtain new leases on crude oil storage tanks and refined materials in major hubs as far into the future as the end of the year 2018. The American Petroleum Institute declared on Tuesday that U.S. crude stockpiles increased at a rate nearly three times higher than was originally predicted, as the inventories climbed last week by a shocking 8.8 million barrels.
Later on Wednesday, the government of the United States will release official data pertaining to the nation’s inventory levels of crude levels. The price of oil recovered following interruptions of output from both Iraq and Nigeria, and also after talks regarding a potential halting of production by nations that are and are not members of the Organization of the Petroleum Exporting Countries.
The potential agreement to steady output was dismissed as “meaningless” by Neil Atkinson, the head of the International Energy Agency’s oil industry and markets division, on Wednesday. Atkinson was quoted as saying, “Amongst the group of countries (potentially participating) that we’re aware of, only Saudi Arabia has any ability to increase its production. So a freeze on production is perhaps rather meaningless. It’s more some kind of gesture which perhaps is aimed … to build confidence that there will be stability in oil prices.”