Oil dips as data points to an increase in US inventories

London — Oil prices fell on Wednesday as industry data pointed to a big build-up in crude oil and distillate stocks in the US, the world’s largest oil consumer, and as pressure mounted on Opec to increase supply.

Brent crude futures were down $1.38, or 1.6%, to $83.34 a barrel at 9.50am GMT. US West Texas Intermediate tumbled $1.60, or 1.9%, to $82.31/bbl.

“Crude prices are declining after the API [American Petroleum Institute] reported the sixth straight week of crude oil inventory increases and as the Biden administration exhausts every possible plea to Opec+ members before tapping their strategic petroleum reserve,” said Edward Moya, senior analyst at Oanda.

Speaking at the COP26 climate summit in Glasgow, US President Joe Biden blamed a surge in oil and gas prices on Opec and allied producers — together known as Opec+ — refusing to pump more crude.

Opec+ meets on Thursday to review its policy and is expected to reconfirm plans for monthly increases.

“The producer group is expected to maintain its 400,000 barrels per day monthly supply increases. This, in turn, should preserve this quarter’s supply deficit,” said Stephen Brennock of broker PVM.

US crude and distillate fuel stocks rose last week while petroleum declined, according to market sources citing American Petroleum Institute figures on Tuesday.

Crude stocks rose by 3.6-million barrels in the week ended October 29. Petroleum inventories fell by 552,000 barrels and distillate stocks rose by 573,000 barrels, the data showed, according to the sources, who spoke on condition of anonymity.

Data from the US Energy Information Administration, the statistical arm of the US department of energy, will be released later on Wednesday.

In a sign that high prices are encouraging more supply elsewhere, BP said on Tuesday it would ramp up investments in its onshore US shale oil and gas business to $1.5bn in 2022 from $1bn this year.

Reuters