LONDON: Oil prices fell 2% on Thursday, largely unwinding an earlier rally, as massive weekly gasoline and distillate stock builds overshadowed a larger-than-expected crude stock draw.
Brent crude fell by $1.57, or 2%, to $79.01 a barrel by 11:23 a.m. EDT, after earlier rising over $1. US West Texas Intermediate crude futures fell $1.47, or 2%, to $73.57.
Low fuel demand and large inventory increases in data from the US Energy Information Administration weighed on prices. Gasoline stocks rose by 10.9 million barrels to 237 million barrels, their highest week-on-week rise in more than 30 years.
Distillate stocks rose last week by 10.1 million barrels to 125.9 million barrels. Distillate product supplied, a proxy for demand, fell to its lowest level since 1999, EIA data showed.
While crude inventories drew by 5.5 million barrels in the week, EIA data showed, much of that reflects shipping disruptions in the Red Sea, said Bob Yawger, director of energy futures at Mizuho.
“The situation in the Red Sea has forced a lot of refiners and buyers of crude oil to go to the United States rather than sail their boat around the Horn of Africa,” Yawger said.
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