As American oil stocks continue to rise, US trade negotiations falter and political tension stirs uncertainty in the Middle East.
It’s not the most ideal of combinations for stability in the oil market but in Friday trading, Brent crude was priced close to US$64 with WTI holding above US$58 a barrel.
This was the fourth week that oil stocks in the US rose, bucking the trend this week with a slightly less than expected rise.
Stronger US inventories have been surprising the markets in recent weeks.
Only 1.4 million barrels was added last week according to the US Information Energy Administration.
The IEA also said that it expected higher production from the US, putting the figure at 12.3 million barrels a day, citing an increase in output from the Permian region as the main driver.
With more than one-fifth of the world’s oil flowing through the Strait of Hormuz, any disruption in the Middle East region alarms the market.
A Saudi Arabia warplane was reported to have been intercepted this week and protests in Iran and Southern Iraq continue as hundreds on frustrated civilians take to the streets.
Roads leading to the main oil producing area of Basra were blocked disrupting transportation from refineries.
A few hundred people have been killed in recent riots since early October.
Part of the anger is directed at the government in terms of accountability for the country’s oil revenue.
The on-going trade dispute between the US and China hit another stalemate again today with US President Donald Trump accusing the Chinese of not making enough concessions.
A report from China says that President Xi Jinping has made it clear that he is not anxious to start a trade war but added he was “not afraid” of tough negotiations.
The October “Phase 1” deal has not materialised and the market is getting frustrated as the global economy stagnates.
The US Congress also approved legislation to support the efforts of pre-democracy groups in Hong Kong, a move not likely to please the Chinese government.
Analysts and traders are busy speculating what OPEC might do in early December when it meets to review production levels.
The cuts are already in place until March 2020 and given a sense of stability in the market in recent months, the general sentiment is for no great action.
The organisation might extend the cuts until mid 2020, but it’ll be a wait and see game for the coming weeks.