Oil prices fall on big build in US crude, fuel inventories
- EIA expects Brent crude prices to average $88.55 a barrel in 2024, up from a previous forecast of $87
Oil prices fell on Wednesday after U.S. government data showed crude oil and fuel inventories swelled by much more than expected on weak demand and lower oil exports.
U.S. crude stocks climbed by 5.8 million barrels in the week ended April 5, more than double the about 2.4 million barrel rise analysts had expected.
Refined products inventories rose unexpectedly with gasoline up by 700,000 barrels and distillate stocks by 1.7 million barrels.
The U.S. Energy Information Administration (EIA) data also showed a roughly 2.1 million barrel per day (bpd) drop in oil product supplied, a proxy for fuel demand, and a 2.7 million bpd drop in crude oil exports.
Brent crude futures fell 28 cents, or 0.3%, to $89.14 per barrel at 11:06 a.m. EDT (1606 GMT). U.S. West Texas Intermediate (WTI) crude futures fell 35 cents, or 0.4%, to $84.88. On Tuesday, both Brent and WTI fell more than 1%.
Oil prices ease slightly, eyes on talks for Gaza ceasefire
“Some of the heat has come out of the rally in crude oil in the early part of this week on hopes of a ceasefire in Gaza and higher U.S. inventories,” said Tony Sycamore, a market analyst at IG in Singapore.
The commander of the Revolutionary Guard’s navy in Iran said it could close the Strait of Hormuz if necessary. About a fifth of the volume of the world’s total oil consumption passes through the strait daily.
On Tuesday, Hamas said an Israeli proposal on a ceasefire did not meet demands of Palestinian militant factions, but it would study the offer further and deliver its response to mediators.
A continuing conflict could drag in other countries, particularly Hamas backer Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC).
Separately, the U.S. EIA sharply raised its forecast for crude oil output. It now expects an increase of 280,000 bpd to 13.21 million bpd in 2024, up from its earlier forecast of a 20,000 bpd increase.
The EIA said it expects Brent crude prices to average $88.55 a barrel in 2024, up from a previous forecast of $87, and it upgraded its demand growth forecast for the past two years.
“Broadly it reconfirmed an oil market outlook with OPEC+ in good control of the oil market,” SEB analyst Bjarne Schieldrop said.
Fitch cut its outlook on China’s sovereign credit rating to negative, citing risks to public finances.
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