Oil futures dive further for the third day and is approximately trading at $68.18 a barrel. Amidst an unexpected rise in US oil inventory. The inventory data released yesterday by the US Energy Information Administration reported an increase of 3.6 million barrels for the week.
Brent oil price was up by 0.24% to $70.56 around 5:43 PM GMT, and WTI futures gained some 0.26% to $68.33. However, prices fell again later this morning.
The American Crude Oil institute reported a draw of 897,000 barrels in crude supply. Analysts believe demand to outpace supply, and the forecasted price to rise to $85 a barrel in quarter four.
And the boost to the price could come from the tensions between the Middle East in the US. The US blaming Iran for recent drone attacks on oil tankers in the Gulf of Oman. The attacks caused the price to rise in one day. The route is becoming a blockage for supply, and some companies have halted their shipments due to these attacks.
In addition to the tensions, investors are concerned about the weather outlook. Storms have been forecasted for the Atlantic, which could disrupt supply further. The National Oceanic and Atmospheric Administration have forecasted adverse weather conditions with an estimated 65% chance of unstable season and two to five major hurricanes.
On the flip side, the rise in oil prices could be capped by the increased Covid-19 infection rate in China. China is the largest importer of fuel.
Oil production to increase
The increase in oil inventory was expected to be around 2.8 million barrels. Instead, it rose by 3.6 million. On the other hand, Gasoline inventories saw a decline by 0.1 million barrels, and the market was expecting it to increase by 2 million barrels.
US oil production has been slower in July than June, with shortages of raw materials and consumer’s spending on services impacting demand. Chinese and US manufacturing PMI both fell below the market forecast for July.
OPEC has decided that overall production should increase by 400,000 barrels per day to increase supply. However, investors’ concerns are that production is expanding, yet inventory is not dropping, pointing towards a slowing demand. MetaNews to update on the news further.