Middle Eastern workers have stopped striking - and oil is getting pounded
The price of oil is tumbling on Wednesday after the return of Kuwaiti oil workers to work, and higher than expected US oil inventories led to renewed concerns about oversupply in the markets following Sunday's failed talks in Doha.
Just after 8:45 a.m. BST (3:45 a.m. ET) both major crude oil benchmarks, Brent and West Texas Intermediate, are off more than 2%, seeing the gains made on Tuesday virtually evaporate. Brent has slipped 2.45% to trade at $42.95 per barrel, while WTI is off 2.5% at $41.41. Here's how both benchmarks look in early European trading:
US inventory data, released by the American Petroleum Institute after markets closed on Tuesday, showed that crude stocks in America grew by 3.1 million barrels last week, nearly double the 1.6 million gain expected. This has added to the oversupply problem, plaguing oil right now.
Crude saw big gains on Tuesday, helped by striking oil workers in Kuwait, but the strike was ended late on Tuesday, and that has renewed fears about the state of the oil market in the wake of the Doha talks.
Kuwaiti workers went on strike on Sunday, and that led to production being slashed from 2.8 million barrels per day at March estimates, to just 1.5 million barrels a day, Bloomberg reported on Tuesday. Workers were striking over a plan to change the way public sector workers in the country are paid, which could lead to wage cuts.
However, workers are now going back to work according to reports in Kuwaiti media, helping oil has return to losses. Here's what Deutsche Bank's Jim Reid had to say early this morning (emphasis ours):
That said it's been a different story for Oil after the US close last night with the news that workers in Kuwait are set to end the 3-day strike which had caused a decent disruption in production levels and was largely attributed to the recovery from the early post-Doha lows at the start of the week. Local press (Al Jarida) are reporting the announcement from the trade union and the news comes just after Kuwait oil's minister had announced that negotiations with workers would not commence until the strike is halted. On the back of the news WTI is currently over 2% lower this morning at a shade above $40/bbl.