Crude oil price is on a decline as several agencies forecast increased supply in the coming months. WTI futures are trading below the crucial support level of $80 at the current $78.21. At the same time, Brent futures are hovering around the psychological $80.

Inventory data
Crude oil price is finding support in the released weekly inventory data. On Wednesday, data from the Energy Information Administration (EIA) showed that the amount of oil in storage declined by 2.101 million barrels in the week ending on 12th November.
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Analysts had expected a build of 1.398 million, which would have been higher than the previous week’s 1.001 million barrels. Notably, the US stockpiles have recorded a build in 6 out of 8 weeks since late September. At Cushing, the largest oil depot in the US, the recorded build of 216,000 barrels comes after a build for 5 consecutive weeks.
At the same time, gasoline inventories dropped by 708,000 barrels compared to the prior week’s draw of 1.555 million and forecasted 575,000 barrels. Gasoline stockpiles have been on a decline for 6 consecutive weeks.
Supply outlook
The released inventory data are in line with the bullish demand outlook that has boosted crude oil price in recent weeks. Indeed, investors expect a surge in demand ahead of the holiday season. The bull run has also been founded on OPEC’s output cuts that are expected to continue into December. That explains $80 has become a steady support zone for the commodity despite the experienced volatility.
Nonetheless, supply will likely outpace demand in the coming months. OPEC has lowered its forecast for global oil demand in the current quarter. Besides, it decided to continue its output cuts by increasing production by a modest 400,000 bpd in December. The move is intended to avert oversupply.
On Tuesday, the alliance’s Secretary-General Mohammad Barkindo highlighted a probable supply surplus in December. On its part, IEA has indicated that US supply is set to increase at a faster rate in Q2’22. The agency expects output from the US to make up for 60% of the predicted 1.9 million bpd supply growth from non-OPEC nations in 2022.
In the short term, investors will also be keen on the new COVID-19 wave reported in Europe. As a response to the rising cases, the Austrian government has imposed a lockdown on the unvaccinated portion of the public.
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