(Bloomberg) – Oil fell as an industry report showed rising US crude inventories and investors worried about weaker demand amid slowing growth.
Most read by Bloomberg
West Texas Intermediate slipped below $85 a barrel after rising 0.9% on Tuesday. The American Petroleum Institute reported that US inventories rose by about 4.5 million barrels over the past week, according to people familiar with the figures. Government data will follow later on Wednesday, with the collapse coming amid heightened concerns over product shipments, including diesel.
While crude oil is posting its first monthly gain since May after the Organization of Petroleum Exporting Countries and its allies, including Moscow, agreed to cut output, prices are still well below peak levels following Russia’s invasion of Ukraine. Investors are worried about slowing demand as central banks hike interest rates to curb inflation. Additionally, traders are focusing on tightened European Union restrictions on Russian flows from December.
“The winter is a tight one, especially as the market prepares for the EU embargo on Russian oil very soon,” said Sean Lim, oil and gas analyst at RHB Investment Bank Bhd. “But then again, if you’re asking if oil prices will rise in December in response, maybe not because Russia has already redirected its exports elsewhere.”
In a bid to contain crude oil and gasoline prices, the Biden administration has released millions of barrels of crude oil from the country’s strategic reserves. On Tuesday, Saudi Arabia’s energy minister criticized major importers for trying to tame prices by selling down inventories while defending OPEC+ supply cuts.
The story goes on
Click here to read Bloomberg’s daily Europe Energy Crunch blog
Widely watched oil market time spreads have weakened this week while remaining in a bullish, bearish structure. Brent’s prompt spread — the difference between the two closest contracts — was $1.75 a barrel in backwardation, compared with more than $2 a barrel on Monday.
Elements, Bloomberg’s daily energy and commodities newsletter, is now available. Sign up here.
Most Read by Bloomberg Businessweek
©2022 Bloomberg LP
Comments are closed.