Oil Prices Decline as U.S Inventories, Production Increase
The prices of crude oil pulled back marginally in the global commodity market on Thursday as markets anticipate softening demand in the United States following a sharp increase in inventories and production, according to the latest data.
The oil market is also facing concerns over possible excess supply. However, losses were limited by ongoing geopolitical tensions in the Middle East and Russia’s war in Ukraine, which continued to add uncertainty to the market.
Brent crude futures slipped 0.1% to trade at $67.41 per barrel at the time of writing, while West Texas Intermediate futures lost 0.3% to $63.50 a barrel.
Both benchmarks had gained more than $1 on Wednesday after Israel targeted Hamas leadership in Qatar and Poland activated its air defences, alongside NATO, to intercept suspected Russian drones that had strayed into its airspace amid attacks on western Ukraine.
Despite the uptick in geopolitical risk, traders appeared to assess that these incidents posed no immediate threat to global oil flows.
The recent rally in prices followed a rebound in early September, after crude had dropped to a three-month low on 5 September. Yet, with attention now shifting to supply-demand fundamentals, market participants are increasingly focused on the latest data.
Major oil consumers’ demand has been slowed due to fluctuation in economic data. India’s arrangement with Russia and China’s imports grow but slowly, and U.S. imports continue to swing.
The US Energy Information Administration (EIA) reported a rise in crude inventories by 3.9 million barrels for the week ending 5 September, contrary to expectations of a 1 million barrel drawdown. Gasoline stocks also saw a 1.5 million barrel increase, defying forecasts for a small decline.
Strategic petroleum reserves, excluded from commercial inventories, rose by 500,000 barrels to 405.2 million. EIA data showed that US crude oil production increased by 72,000 barrels per day (bpd) to about 13.49 million bpd during the week ending May 16.
US crude oil imports decreased by 471,000 bpd to approximately 6.27 million bpd, while exports decreased by 1.1 million bpd to around 2.745 million bpd over the same period.
In the Short-Term Energy Outlook (STEO) released on Sept. 10, the EIA predicted that crude oil output in the country would reach an average of 13.4 million bpd in 2025.
This build-up in inventories comes as the US economy shows signs of slowing. Weaker labour market indicators and falling producer prices are pointing to a softening in demand, further clouding the outlook for crude consumption. #Oil Prices Decline as U.S Inventories, Production Increase Chinese Investors Plan $700m Agricultural Investment in Katsina
