Oil prices dropped on Wednesday after the American Petroleum Institute reported a significant increase in US commercial crude stocks. The report fueled concerns that demand may not be high enough to combat the global oil glut.
US commercial crude stocks increased by 7.1 million barrels to reach 473 million barrels last week, which far surpassed the expectations of a 3.9 million barrel increase.
Weak demand from emerging nations and an increase supply from the largest producing countries has caused oil prices to drop significantly over the last year.
Analysts say that oil prices are more likely to fall than rise as there is no sign that the glut will be over anytime soon. Many of the world’s top traders also see a very limited upside for oil until at least mid-2016.
In the US, crude futures for December delivery dropped to $45.64 a barrel, down $.65. Brent crude for December was down to $48.41 a barrel, dropping $.30.
Official oil inventory figures are expected to be announced at 10:30 AM’s on Wednesday by the US Energy Information Administration. Investors are waiting to see if the report coincides with the API data.
Only five of the non-OPEC countries sent officials to the OPEC meeting in Vienna on Wednesday to discuss market cooperation. This according to one OPEC delegate, the meeting would unlikely lead to any agreement.