Oil prices decreased on Wednesday as reports from the industry revealed that U.S. oil stockpiles increased more than anticipated, but losses were restrained by supply concerns. After closing 26 cents higher the day before, December Brent crude futures were down 72 cents, or 0.8%, at $92.80 a barrel. West Texas Intermediate (WTI) crude for the United States fell 48 cents, or 0.6%, to $84.84 in December, reversing the previous session’s gain.
“The concern of supply reductions has been outweighing the probability of a global economic downturn and tighter monetary policy in recent weeks,” analysts at ANZ Research wrote in a note. According to data from the American Petroleum Institute, an industry association, U.S. oil stockpiles increased by around 4.5 million barrels in the week ending October 21, market sources reported. That exceeded the five analysts Reuters questioned, who predicted a build of, on average, approximately 200,000 barrels.
The new EU penalties against Russian oil that will go into effect in December and the production curbs by OPEC that began in November should boost prices, according to Stephen Innes, the managing partner at SPI Asset Management. Regarding the large WTI-Brent differential in recent sessions, Innes stated that WTI purchasers are keeping an eye out for any additional interventions by President Joe Biden before the November 8 U.S. midterm elections. As petroleum becomes more expensive for individuals using other currencies, a stronger dollar reduces the demand for oil.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, recently decided to reduce their oil production. Despite still being stung by this decision, the White House welcomed Saudi Arabia’s efforts to support Ukraine in its conflict with Russia on Tuesday. In response to complaints about the high rate of inflation, Biden has warned that the Saudis will pay a price for their allegiance to Russia and their agreement to cut back on their supply of crude. On Wednesday, the Energy Information Administration is expected to provide official data on the United States stockpiles.
