Oil Ended Its 3-day Rally

Crude oil recorded its first trading day losses this week, pressured by an unexpected buildup in US crude inventories and trade woes towards the prolonged phase one trade deal.    

According to the Energy Information Administration (EIA), last week, crude oil inventories rose to 7.9M barrels, not only missing its expectations to raise the only 1.5M but also higher than last week’s buildup of 5.7M. Despite continuous production cuts by OPEC+, which remain unclear, the effectiveness for the market on the upcoming meeting this December about a positive outcome sentiment, where the oversupply remains a real concern for the oil market, with global recession further weighing on global demand. Is it time to re-evaluate the energy cartel’s long-standing strategy?  

Furthermore, previous oil rally, which was supported by trade optimism, slowly diminishes with no further updates on trade progress. Tables turned after a US official from Trump Administration said on Wednesday that the signing of the phase one trade deal might be delayed until December. Market’s anticipation for the agreement to be signed this month slowly fades, with skepticism growing after both the US and China failed to provide details on the terms and venue for signing the deal. 

As of now, the crude oil price is still struggling to hold above its $56 handle, with market participants now all eyeing on further trade sentiments before making a rash decision towards their oil investments.

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