Oil prices saw a third consecutive day of declines due to larger-than-expected increases in crude and gasoline stockpiles in the U.S., which have eased supply concerns.
Brent crude futures decreased by 43 cents, or 0.50%, to reach $85.39 a barrel at 0623 GMT. Similarly, U.S. West Texas Intermediate crude saw a retreat of 53 cents, or 0.63%, resulting in a price of $82.96 a barrel.
Both benchmark oil prices have reversed most of the gains seen earlier in the week, following a decline of over 2% in the previous session.
Data from the American Petroleum Institute on Wednesday revealed that U.S. crude oil inventories increased by approximately 12.9 million barrels, far surpassing the expected 500,000-barrel gain predicted by analysts in a Reuters poll.
The build in inventories was attributed to lower refinery run rates due to maintenance, according to analysts at ING.
Additionally, gasoline inventories climbed by 3.6 million barrels, which contrasts with the anticipated 800,000-barrel drop projected by analysts. This data has raised concerns over dwindling fuel demand in the United States.
JP Morgan analysts have noted that fuel prices may be nearing consumers’ pain threshold, with signs of reduced fuel consumption becoming evident.
Concerns about supply in the Middle East are also subsiding, which has placed downward pressure on oil prices. Market analysts have noted that the impact of the Israel-Hamas conflict on the oil market appears limited and contained within that region.
Nonetheless, the U.S. Energy Information Administration (EIA) will release further inventory data later in the day, which could impact oil prices.
Despite these factors, the U.S. EIA predicts that global oil inventories will continue to decrease in the second half of 2023. This reduction in inventories, coupled with expectations of oil supply remaining below consumption levels, is likely to provide support to oil prices, according to the EIA’s monthly report.
