Higher than expected oil stocks push prices down

London — Oil prices fell on Wednesday after industry data showed crude oil stockpiles rose more than expected and fuel inventories unexpectedly increased last week in the US, the world’s largest oil consumer.

Brent oil futures fell $1.13 cents, or 1.3%, to $85.27 a barrel by 9.02am GMT after closing at the highest in seven years on Tuesday.

West Texas Intermediate (WTI) futures were down $1.44, or 1.7%, to $83.21 per barrel after gaining 1.1% in the previous session.

Crude oil inventories rose 2.3-million barrels in the week ending October 22, market sources citing American Petroleum Institute figures said late on Tuesday. That was more than the expectations for a 1.9-million barrel gain.

Petrol inventories rose by 500,000 barrels and distillate stocks increased by 1-million barrels, compared with a forecast for both to drop.

With Brent rising the past eight weeks and WTI climbing for the past 10 weeks, prices are starting to look overbought, analysts said.

“Barring more bullish headlines, which is possible considering what we saw yesterday, we could see some profit-taking in Brent and WTI, which would be healthy for the market,” said Craig Erlam, senior market analyst at Oanda.

Storage tanks at the Cushing, Oklahoma, delivery hub for WTI oil are more depleted than they have been in the past three years, while prices for longer-dated futures contracts point to supplies staying at those levels for months.

But a patchy recovery around the world from the worst health crisis in 100 years, after the Covid-19 pandemic dented demand for months on end, has often led to doubts over the sustainability of prices.

“The global oil market is still at risk due to not fully containing the coronavirus and its variants,” said Stephen Brennock of oil broker PVM.

“A flare-up in cases over the [northern hemisphere] summer weighed heavily on prices and this could feasibly happen again if the situation worsens.” 

Reuters