Oil falls on rising US crude stockpiles
Brent and WTI crude oil futures fall by 0.8% and 0.6% respectively
Oil prices dipped on Wednesday after data revealed a rise in US fuel inventories and crude oil stockpiles for the week ending 22 October.
On Tuesday, the American Petroleum Institute (API) stated that crude inventories rose by 2.3 million barrels in the week, 400,000 barrels more than had been expected.
Instead of the decline that had been predicted, distillate stockpiles rose by one million barrels and gasoline inventories by 500,000 barrels.
By 14:45 (BST), Brent crude futures traded down by 0.8% at $85.71 per barrel, having started the month at $79.21 per barrel.
West Texas Intermediate crude futures stood 0.6% lower at $84.16 per barrel, having begun October at $75.88 per barrel.
API’s Tuesday industry data was followed on Wednesday by official data from the Energy Information Agency (EIA).
This found that US crude oil inventories rose by 4.26 million barrels to 430.8 million barrels, almost double the increase reported by the API.
Distillate stockpiles and gas inventories did decline, however, falling by 432,000 barrels and 1.9 million barrels respectively.
Although Brent has fallen from the three-year high above $86 per barrel that it reached at the start of the week, the international benchmark is still forecast to trade higher in the coming months as the northern hemisphere enters into winter and demand continues to outstrip supply.
The Organisation of the Petroleum Exporting Countries’ refusal to accelerate its planned easing of production cuts has frustrated national leaders from US President Joe Biden to Japanese Prime Minister Fumio Kishida.
Goldman Sachs, which has raised its Brent forecast for the end of 2021 by $10 to $90 per barrel, argued that in addition to OPEC+’s reluctance, the response of non-OPEC producers has been too weak to meet rising demand.
Nor is the phenomenon expected to be short-lived. BNP Paribas has stated that it expects oil prices of around $80 per barrel in 2023, while Morgan Stanley recently increased its long-term oil price outlook to $70 per barrel, a $10 rise.