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Oil prices
The world weakened in trading, Tuesday (11/11), as concerns about excess supply suppressed market optimism regarding the potential end of the partial shutdown of the United States (US) government.
Quote
Reuters
, the price of Brent crude oil fell 13 cents or 0.2 percent to US$63.93 per barrel.
Meanwhile, US West Texas Intermediate (WTI) crude oil also weakened 13 cents or 0.2 percent to US$60 per barrel.
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Both oil price benchmarks had previously strengthened by around 40 cents in the previous trading session.
The price decline occurred despite positive signals from Washington.The longest US government shutdown in history could potentially end this week after a federal funding compromise passed a preliminary stage in the Senate on Sunday evening local time.However, it is unclear when Congress will give final approval.
This progress has led to strengthening in global financial markets, but concerns over excess oil supply remain a factor holding back price increases.
“As OPEC production increases continue, the global oil balance shows a trend
bearish
on the supply side, while demand remains weak due to slowing economic growth in major consuming countries,” wrote Ritterbusch and Associates analysts in a research note.
Earlier this month, OPEC+ agreed to raise its December production target by 137 thousand barrels per day, the same as the increase in October and November.However, the alliance of oil producers also decided to halt production increases in the first quarter of next year.
The market is also still monitoring the impact of the latest sanctions imposed by US President Donald Trump on two large Russian oil companies, Rosneft and Lukoil.
Source
Reuters
mentioned, Lukoil has stated
force majeure
on its oil field projects in Iraq, while Bulgaria prepares to take over the company’s Burgas refinery.The move is the biggest impact so far of sanctions imposed last month.
In addition, the volume of oil stored on ships in Asian waters has reportedly doubled in recent weeks.The increase came after Western sanctions tightened Russian oil exports to China and India, while import quota restrictions put a brake on demand from independent refiners in China.
Several refineries in China and India are known to have started switching to purchasing oil supplies from the Middle East and other countries.
Ritterbusch added that the main challenge for the outlook for oil prices is that it tends to slope (
bearish
) now is the extent to which China will continue to include Russian oil in its strategic reserves, as well as whether India will follow Trump’s suggestion to delay further purchases from Russia.
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