October 12, 2023 (MLN): Global oil prices extended their downward trajectory on Thursday amid easing supply concerns and a larger than expected crude buildup in the U.S.
Brent crude is currently trading at $84.79 per barrel, down by 0.35% on the day.
While West Texas Intermediate crude (WTI) is trading at $81.77 per barrel, down by 0.40% on the day.
Despite remaining in the red zone for three consecutive sessions, oil prices have still increased during the week due to the Israel-Palestine conflict that unfolded over the weekend.
U.S. crude oil stockpiles swelled by about 12.9 million barrels, according to market sources citing American Petroleum Institute figures on Wednesday, as Reuters reported.
"Unlikely to help sentiment this morning are API inventory numbers…Lower refinery run rates due to maintenance likely contributed to this build," said ING analysts in a client note.
Gasoline inventories also rose by 3.6 million barrels, the data showed, a stark contrast from the 800,000-barrel drop expected by analysts and continued to stoke worries of slowing fuel demand in the U.S.
"Fuel prices may be closer to consumers' pain threshold than inflation-adjusted prices might suggest. There are already signs that consumers have responded by cutting back on fuel consumption," JP Morgan analysts said in a client note.
"In PADD 5, of which California is the biggest consumer, we estimate gasoline demand dropped 100,000 barrels per day between June and September, to a seven-month low of 1.46 million barrels per day," they added.
Elsewhere, market concerns about the supply situation in the Middle East continued to ease, putting downside pressure on prices.
"Crude oil extended losses on signs the impact of the Israel-Hamas war on the oil market will be limited," ANZ analysts said in a client note.
ING analysts also said: "The risk premium continues to erode with the conflict largely contained to Israel and Hamas."
Expectations by the U.S. EIA of global oil inventories falling further in the second half of 2023, however, limited price weakness.
The lower inventories, which are forecast to keep global oil supply below consumption, are likely to boost oil prices, the EIA said in a monthly report.
Copyright Mettis Link News
Posted on: 2023-10-12T11:28:26+05:00
