Crude oil prices have declined for a third consecutive day, reacting to reports from the American Petroleum Institute (API) suggesting the largest weekly increase in crude stockpiles in the United States in eight months.
After a 4% price rally on Monday, driven by concerns over oil exports from the Middle East following the Israel-Palestine conflict, crude markets have entered a period of relative calm over the past two days, as it became evident that the market may have overreacted to the crisis.
Crude prices have retraced over 3% of their gains in the last 48 hours, especially after a Reuters report indicated that Saudi Aramco had informed several North Asian refiners of its intention to supply the full contractual volumes nominated for November. This announcement contradicted Riyadh’s previous public statements regarding the importance of keeping the market tight, rather than ensuring generous supplies are readily available.
On Wednesday, the API reported that US crude oil stocks may have risen by nearly 13 million barrels last week, potentially marking the highest build since February.
As of Thursday afternoon in Singapore, the US-traded West Texas Intermediate (WTI) crude for November delivery fell by 0.4% to $83.18 per barrel. From a high of $87.24 on Monday, the benchmark US crude benchmark dipped to a low of $82.78 in the last session.
Market analyst Greg Michalowski noted that moving below $82.35 would further increase the bearish bias, with the next support at last week’s low of $81.56.
The London-traded Brent crude for the most-active December contract also fell by 0.3% to $85.60. On Monday, Brent reached a high of $89.00, but it hit a low of $85.19 on Thursday.
The API reported a rise in gasoline stockpiles, with distillate stocks falling and a drop in storage levels at the Cushing, Oklahoma delivery point for US crude. The API’s data serves as a precursor to the official inventory report from the US Energy Information Administration due later in the day.
Analysts expect the EIA to report a crude stockpile drop of 0.37 million barrels for the last week, a gasoline inventory draw of 1.5 million barrels, and a 1.5 million barrel drop in distillate stockpiles.
The crude oil market has shifted from a super bullish narrative to a suspect one within just three days, according to John Kilduff, a partner at a New York energy hedge fund.
