After a remarkable 10-day rally that saw a 10% increase in oil prices, both West Texas Intermediate (WTI) crude and Brent crude experienced a slight dip of close to 1% each. This decline came despite the U.S. Energy Information Administration (EIA) reporting a fourth consecutive weekly decrease in domestic crude stockpiles.
WTI settled at $86.87 per barrel, down 67 cents or 0.8% for the day, after hitting a 10-month peak of $88.09 during Wednesday’s session. Despite this decline, WTI remained up 1.5% for the week, extending the 7.2% gain from the previous week.
Similarly, Brent crude settled below the critical $90 per barrel mark for the first time in three days, closing Thursday’s official trade at $89.22, down 68 cents or 0.8%. Despite this dip, the global oil benchmark remained up 1.5% for the week.
Phil Flynn, an analyst at Chicago’s Price Futures Group, noted that oil prices had entered an overbought territory due to the near 30% rally since mid-June. Flynn suggested that this modest correction could attract more buying interest at lower price levels.
Commodities chartist Sunil Kumar Dixit, who heads SKCharting.com, mentioned that WTI might need to drop below $86 to stimulate demand at the lower end of the price range.
Regarding the U.S. crude inventory report, the EIA revealed a decrease of 6.307 million barrels during the week ending September 1, following a 10.584 million-barrel draw the prior week to August 25. Refineries had been operating at a high run rate of over 93% of capacity for four weeks leading up to the Labor Day holiday, with fuel consumption expected to ease after the holiday season, signaling the unofficial end of summer road trips in the U.S.
On the fuels side, the EIA reported a decrease in gasoline inventories for the past week and an increase in distillates. Gasoline inventories saw a decline of 2.666 million barrels, while distillates experienced a build of 0.679 million barrels, following the prior week’s gain of 1.235 million barrels. Distillates are refined into heating oil, diesel for various forms of transportation, and jet fuel.
