Oil ETFs Continue to Slip on Surprise Inventory Injection
This article was originally published on ETFTrends.com.
Crude oil prices and related exchange traded funds weakened Wednesday after U.S. output hit another record and domestic inventories surged.
On Wednesday, the United States Oil Fund (USO) , which tracks West Texas Intermediate crude oil futures, declined 0.7% and the United States Brent Oil Fund (BNO) , which tracks Brent crude oil futures, was flat.
Meanwhile, WTI crude oil futures were 0.9% lower to $61.7 per barrel and Brent crude was down 0.1% to $72.1 per barrel.
While crude oil prices somewhat strengthened in early morning trade on news that Russia and Saudi Arabia were in talks to cut down crude output next year, oil prices pared earlier gains once the U.S. Energy Information Administration revealed domestic crude inventories rose 5.8 million barrels last week, or more than double expectations, Reuters reports.
Furthermore, crude output jumped to 11.6 million barrels per day, a weekly record.
“It is a bearish report, with the further rise in overall crude oil inventories of 5 million barrels and the large rise in inventories at the Cushing delivery hub of over 2 million barrels,” John Kilduff, a partner at Again Capital Management, told Reuters.
Further dragging on the oil outlook, OPEC and other forecasters have signaled that the global oil market could produce a surplus in 2019 on slowing demand, despite a dip in Iranian oil exports after U.S. sanctions took effect on Monday.
“The market has yet to prove that it can hold onto a rally, so the short-term mood is still very negative,” Phil Flynn, analyst at Price Futures Group, told Reuters.
Top producers from OPEC and its allies began bilateral talks on a return to production cuts next year after the group decided to reverse output curbs in place since 2017 during the summer conference in response rising gasoline prices and pressure from the U.S.
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