Oil prices retreated on Wednesday after fresh industry data pointed to another rise in U.S. crude stockpiles, adding to concerns that global supply may be outstripping demand. However, the pullback remained modest as traders kept a close eye on impending U.S. sanctions that could limit Russian oil flows.
As of 07:30 GMT, Brent crude slipped 22 cents, or 0.3%, to $64.67 a barrel, following a 1.1% gain in the previous session. WTI futures were down 17 cents, or 0.3%, at $60.57, after climbing 1.4% on Tuesday.
According to market sources citing American Petroleum Institute data, U.S. inventories of crude and refined products rose last week. The API reported that crude stocks increased by 4.45 million barrels, gasoline by 1.55 million barrels, and distillate inventories by 577,000 barrels.
ING’s commodities strategists described the report as “overall […] relatively bearish,” but cautioned that “Market participants appear more concerned about supply risks than the odds of a surplus going forward.”
A new wave of U.S. sanctions targeting Rosneft and Lukoil requires companies to cease dealings with the Russian producers by November 21, adding potential strain to global supply chains. The U.S. Treasury said Monday the measures are already squeezing Moscow’s oil revenues and are expected to reduce export volumes further. Buyers in China and India have reportedly begun securing replacement supplies.
Emril Jamil, senior oil analyst at LSEG, said: “Benchmark prices are rangebound, with the market eyeing the (November 21) sanctions’ impact, though there are downward pressures in the background with oversupply sentiment.”
Prices had firmed on Tuesday as traders digested the sanctions and a series of Ukrainian strikes on Russian refineries and export terminals, which heightened worries about near-term disruptions to crude and fuel supplies.
Still, analysts warn that expectations of oversupply remain a counterweight to geopolitical pressures. European diesel margins surged to their highest level since September 2023 following the Ukrainian attacks, signaling tightness in refined fuel markets even as crude appears plentiful.
Analysts at Haitong Futures noted, “Oil prices have found support from the strong diesel market but the persistent crude oversupply is keeping investors cautious about chasing further gains in crude.”
Market attention now turns to official U.S. government inventory figures due later Wednesday. A Reuters poll of eight analysts forecasts that crude stocks likely fell by around 600,000 barrels in the week ended November 14.
Leave a Reply