Crude Oil Slumps As EIA Crude Inventory Shows A Sudden Jump

(RTTNews) - Crude oil prices tumbled on Thursday primarily due to the Energy Information Administration's report today showing that crude oil inventories in the U.S. increased much more than expected, sparking demand concerns.

WTI Crude Oil for November delivery was last seen trading down by $0.97 (or 1.66%) at $57.30 per barrel.

Data released by the U.S. Energy Information Administration's today revealed that for the week ending October 10, crude oil inventories rose by 3.524 million barrels. Economists had expected crude oil inventories to inch up by 0.1 million barrels.

At 423.8 million barrels, U.S. crude oil inventories remain about 4 percent below the five-year average for this time of year, the EIA said.

For the same period, gasoline inventories declined by 267,000 barrels, distillate inventories decreased to 4529,000 barrels, and heating oil inventories fell by 519,000 barrels.

The United Kingdom on Wednesday announced 90 new sanctions targeting Russia's oil sector. The U.K.'s list includes China's ports and trading entities along with seven Russian LNG vessels as well as Indian firm Nayara Energy's Vadinar refinery, co-owned by Russia's Lukoil and Rosneft.

To cut down on the petrodollars that Russia receives from its oil exports, months before, U.S. President Donald Trump had imposed a 25% "penalty tariff" on Indian exports to the U.S. (on top of the earlier-imposed 25% "reciprocal tariff") to discourage the nation from buying Russian oil.

Now, Trump has announced that Indian Prime Minister Narendra Modi had assured on Wednesday that India would stop buying from Russia. Though India did not officially confirm or deny Trump's statements, it just stopped short of saying that it wanted to ensure stable energy prices and a secure supply.

However, Russia has stated that it was confident its partnership with India would continue.

With the message coming from Trump himself, traders estimate that if the big-buyer India is out, it could reshape flows and boost demand elsewhere.

Meanwhile, Ukraine's President Volodymyr Zelenskyy is scheduled to meet Trump to discuss the U.S. supply of long-range Tomahawk missiles to Ukraine. Of late, Russia and Ukraine have been attacking each other's oil facilities, raising concerns of supply disruption.

Amin Nasser, the CEO of the Saudi state oil giant Aramco, has warned the world risks a supply shortage if the oil industry does not step up exploration and invests soon in new supplies. His remarks align with what OPEC Secretary General Haitham Al Ghais stated on Wednesday, when he underscored that investments in new supply will be needed for the near future.

OPEC's October report revealed that total oil output from its 12 member countries climbed by 524,000 barrels per day in September to 28.44 million bpd.

The organization's latest outlook projected a daily rise of 1.38 million barrels in global oil demand for 2025.

However, in its latest report released on Tuesday, the Paris-based International Energy Agency provided a more bearish outlook forecasting a surplus of 2.35 million bpd in 2025 and 4 million bpd for next year.

Traders are trying to make sense of the divergent projection estimates from OPEC and the IEA.

In the U.S., the government shutdown entered day 16 today.

On Tuesday, U.S. Federal Reserve's Chair Jerome Powell acknowledged the slow growth in hiring. Investors interpreted from his speech that a rate cut decision in the Fed's October meeting is more certain to happen.

In the Middle East, after the first phase of the Gaza Peace Plan (proposed by Trump) ended with the near-complete exchange of prisoners and captives by Israel and Palestinian Hamas group, peace in Gaza is becoming a reality. This has taken out the geopolitical risk premium in the middle eastern oil trade.

Crude oil being a dollar-denominated commodity, any rate-cut decision would alter the U.S. dollar value and thereby impact crude oil prices in the short-term.