Oil prices dipped on Wednesday as industry data revealed that US oil reserves climbed more than expected, but supply concerns capped losses. Brent crude futures for December slid $1.03, or 1.1%, to $92.49 a barrel by 0635 GMT, after closing 26 cents higher the day before.
WTI crude futures in the United States fell 75 cents, or 0.9%, to $84.57 in December, reversing the previous session’s gain. “In recent weeks, the prospect of a global economic slump and stricter monetary policy has overshadowed the threat of supply reductions,” ANZ Research analysts stated in a note.
According to market sources citing American Petroleum Institute estimates, oil stocks in the United States grew by about 4.5 million barrels in the week ended Oct. 21. This outperformed the estimates of five analysts polled by sources, who had projected an average build of 200,000 barrels.
While an increase in gasoline reserves fuelled fears of a global recession, which would lower demand, continuing supply bottlenecks kept prices in a narrow range. “OPEC production cuts beginning in November and new EU penalties on Russian oil beginning in December should boost (price),” said Stephen Innes, managing partner at SPI Asset Management.
Innes noted that WTI buyers are keeping a watch out for any more interventions by President Joe Biden ahead of the November 8 U.S. midterm elections. Biden announced last week that he intends to sell the remainder of a record release from the nation’s emergency oil stockpile before the end of the year in an effort to cut high fuel prices.
While still reeling from the recent decision by the Organization of Petroleum Exporting Countries (OPEC) and its allies, led by Russia, to limit oil output, the White House hailed Saudi Arabia’s assistance to Ukraine in its confrontation with Russia on Tuesday.
Faced with criticism over rising inflation, Biden warned the Saudis that joining forces with Russia and agreeing to limit petroleum exports will have consequences. Meanwhile, the Energy Information Administration is set to reveal official US inventory figures on Wednesday at 1430 GMT.
Analysts said the increase in inventory in the United States heightened fears of a drop in demand, while global supply concerns remained amid geopolitical tensions.
Prices were also impacted by weak Chinese import data. In September, China imported 9.8 million barrels per day, 2% less than the previous year. China is the world’s second-largest oil importer, and a decline in imports has an impact on worldwide demand.
On Monday, China released its third-quarter GDP results, which indicated a 3.9% year-on-year growth rate, which was higher than predicted. However, growth is far lower than the official target of 5.5%. Recent covid control measures and constraints have had an influence on corporate activities in a number of major Chinese cities.
Crude oil prices declined as a result of the stronger currency. A rising dollar makes crude oil more expensive for importing countries using other currencies, affecting worldwide demand. Analysts said investors are waiting for the US Energy Information Administration to provide official data on oil stockpiles later in the day.
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