Oil prices slide amid signs of massive US inventory build

Investing.com– Oil prices hovered around more than three-month lows in Asian trade on Wednesday as signs of a surprise spike in U.S. inventories raised doubts over just how tight supplies would remain.

Data from the showed that U.S. crude inventories surged 11.9 million barrels (mb) in the week to November 3, much more than expectations for a draw of 0.3 mb.

The reading indicated that U.S. stockpiles were increasing amid slowing fuel demand, especially as the winter season limits travel. The API data heralds a similar reading from official – the release of which has been postponed to November 13 by the Energy Information Administration.

The inventory data added to concerns over tighter oil markets, coming just a day after Bloomberg data showed that Russia’s oil exports hit a near four-month high in the prior month.

Recent data also showed production by the Organization of Petroleum Exporting Countries (OPEC) rose in October, even as Saudi Arabia and Russia vowed to maintain ongoing supply cuts till the end of the year. 

This was accompanied by data showing consistent economic weakness in top crude importer China. While the country’s oil imports remained steady in October, a bigger-than-expected decline in overall pointed to sustained weakness in its biggest economic engines.

China’s fuel exports also declined, as local refiners appeared to be reaching the end of their export quotas. 

China has built up its oil inventories steadily this year, which could see a reduction in its crude appetite over the coming months. from the country, due on Thursday, is expected to offer more insight into the economy, which has been largely struggling this year. 

expiring January sank 0.3% to $81.33 a barrel, while due in December fell 0.5% to $76.98 a barrel by 20:47 ET (01:47 GMT). 

Dollar rebound weighs with Powell speech in sight 

A sustained rebound in the , from six-week lows, also weighed on oil markets this week, as a slew of Federal Reserve officials downplayed expectations that the central bank will not raise interest rates further.

Expectations of a Fed pause had grown following less hawkish signals from the Fed and weak nonfarm payrolls data last week. But central bank officials speaking this week warned that resilience in the U.S. economy and sticky inflation could elicit a higher policy rate from the Fed.

On that end, focus this week is squarely on a speech by later in the day, and another talk on Friday. Markets will be waiting to see whether Powell maintains his hawkish rhetoric, given that the Fed chair has warned that U.S. rates will remain higher for longer.