Nov. 8 (UPI) -- A declining risk premium on word of business-as-usual from Saudi Arabia and expectations of a cooler market ahead pushed oil prices lower early Wednesday.
Crude oil prices spiked as much as 3 percent early this week after the government in Riyadh rounded up a handful of ministers as part of a sweeping crackdown tacitly broadcast as a move against corruption. That coincided with escalating tensions in the region, pitting rivals Iran and Lebanon against Saudi Arabia.
The Saudi Arabian Monetary Authority sought to allay investor concerns, however, putting a lid on the risk premium from early this week.
"It is business as usual for both banks and corporat[ions]," the official Saudi Press Agency stated.
The price for Brent crude oil was down 0.42 percent to $63.42 per barrel as of 9:15 a.m. EST. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.33 percent to $57.01 per barrel.
Oil prices may be approaching the point at which shale oil producers in the United States kick into overdrive, undermining an approach by the Organization of Petroleum Exporting Countries to correct an oversupplied market with coordinated production cuts.
U.S. supermajor ConocoPhillips said Wednesday its three-year spending plan was supported so long as WTI held above $50 per barrel.
In its short-term market report, published Tuesday, the U.S. Energy Information Administration raised its growth forecast for next year by about 6 percent to 720,000 barrels per day, to give an average production rate for next year of 9.95 million barrels per day.
"The U.S. shale machine is poised to shift up a gear as producers make hay amid the improving price backdrop," Stephen Brennock, an analyst with London oil broker PVM, said in an emailed market report.
Markets will react later in the day when EIA releases its official data on U.S. crude oil and gasoline inventories. The American Petroleum Institute reported a drain on crude oil levels of about 1.5 million barrels, though gasoline storage levels showed a slight gain, indicating seasonal demand factors may finally be emerging.
EIA forecast a steady drift lower for crude oil prices for the rest of the year, with Brent shedding as much as $7 per barrel for the 2018 average.
"EIA expects global oil supply growth to outpace global oil demand growth in 2018, contributing to global oil inventories rising by a forecast 0.3 million barrels per day in 2018, compared with an estimated 0.2 million barrels per day draw in 2017," the report read.