Oil Prices Fall over Surprise Build in US Inventories
Oil prices fell over surprise build in US inventories as per the American Petroleum Institute, API data released. The report showed that US crude oil inventories increased by 2.26 million barrels over the last week, as opposed to expectations for stocks to fall by roughly 2.8m barrels.
Increased crude oil stock in US is bearish for the market, a negative sign about demand in the top oil consumer. The market also expect weak demand from the second largest oil consumer, China, after industrial production slumped.
Brent crude and WTI are edging 0.2% lower to $85.17 and $80.55 a barrel, respectively in the global commodity market on Wednesday.
Sentiment is supported by prospects of tightening supplies over the third quarter, as rising demand during travel season and the rollover of OPEC+ cuts are expected to keep the market undersupplied.
Both benchmarks gained more than 1% in the previous session after a Ukrainian drone attack sparked a large fire at an oil terminal in Southern Russia.
Oil prices strengthened yesterday on signs of a stronger physical market, while further supply disruptions in Europe led to a rally in natural gas prices
ICE Brent settled 1.28% higher on the day, taking it back above $85/bbl. This is the market’s strongest close since late April, according to ING commodities strategists.
While a broader risk-on move has proved supportive for oil, there are also some signs of strength in the physical market, analysts said.
The market anticipated that crude oil supply with be tightened in the third quarter of this year after the rollover of OPEC+ cuts.
Numbers from the API overnight show that US crude oil inventories increased by 2.26 million barrels over the last week, as opposed to expectations for stocks to fall by roughly 2.8m barrels.
Crude inventories at Cushing increased by 524k barrels, while gasoline stocks fell by 1.08m barrels and distillate stocks increased by 538k barrels, ING said in midweek note. UBA Trades at 34% to 52-Week High
