The price of oil slid lower during European trading hours on Wednesday, hitting a two-week low as market participants seek for fresh cues on U.S. stockpiles of crude and refined products.
The U.S. Energy Information Administration is scheduled to release its weekly report on oil stockpiles at 10:30 AM ET amid anticipations for an increase of 921,000 barrels.
At 04:29 ET, Brent crude oil futures were valued at $48 per barrel; 37 cents lower from its previous close, while the U.S. WTI crude futures declined 21 cents to $46.14 per barrel.
Oil prices had increased by more than 20 percent since the start of August on expectations that the oil producers are discussing potential effective solutions on the supply glut, setting prices on course for their biggest monthly gains since April.
Analysts, however, mentioned that the focus had moved to physical market fundamentals, which remained unstable.
“The market is getting tired of those headlines,” Olivier Jakob, managing director of Petromatrix said, pertaining to the potential oil production cut.
“Fundamentally, there is not a lot to support oil because the stocks are still at very high levels,” he continued.
On Wednesday, Khalid al-Falih, the energy minister of Saudi Arabia said that the country does not have a specific target figure for its oil output and its production will be determined by the demands of its consumers.
The further increase on oil stockpiles could limit any surge in prices. According to the data released by the American Petroleum Institute on Tuesday, the U.S. crude stocks had increased by 942,000 barrel to 525.2 million barrels in the week to August 26.
Another factor that affects the further weakening of crude is the further strengthening of the U.S. currency. It is known in the financial markets that a stronger dollar makes dollar-denominated assets, such as crude, more expensive for holders of other currencies. The U.S. dollar index, which measures the dollar’s strength against other major currencies, reached 96.143 on Tuesday, its strongest since August 9.
“The pullback in commodity prices is likely to continue in the short term, with a stronger U.S. dollar and weaker fundamentals,” ANZ mentioned in a note.
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