Oil prices fell nearly 4% on Wednesday to their lowest since June as concerns grew about global fuel demand after US data showed a larger-than-expected rise in oil stocks. Gasoline.

Brent crude futures closed down $2.90, or 3.8%, at $74.30 per barrel. U.S. WTI crude oil futures fell $2.94, or 4.1%, to $69.38 a barrel.

“There is demand destruction coming from the fuel side,” said Dennis Kissler, senior vice president of trading at BOK Financial.

“The market is more focused on demand than supply right now.”

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Oil prices fell to their lowest levels since June on Wednesday. (REUTERS/Nichola Groom/File photo/Photos from Reuters)

Concerns about China's economic health and future fuel demand also weighed on prices, a day after ratings agency Moody's cut the outlook on China's A1 rating from stable to negative.

U.S. gasoline inventories rose by 5.4 million barrels last week, the Energy Information Administration said, more than quintupling the 1 million barrel increase that analysts had expected. U.S. gasoline futures fell to their lowest level in two years.

“Even though it wasn't peak gasoline season, demand over the long Thanksgiving holiday weekend was weak,” said John Kilduff, partner at Again Capital LLC.

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Russian oil production

Gasoline demand was relatively weak during the Thanksgiving travel period. ((Photo by Christophe Gateau/image alliance via Getty Images) / Getty Images)

Gasoline demand last week was 2.5% below the 10-year seasonal average.

The US dollar also hit a two-week high, putting pressure on demand by making oil more expensive for holders of other currencies.

An unexpected drop in US crude stocks did little to support prices. Crude oil inventories fell by 4.6 million barrels, far exceeding the 1.4 million barrel drop expected by analysts. [EIA/S]

SAUDI ARABIA EXTENDS CUTS IN OIL PRODUCTION IN BEGINNING OF 2024

OPEC Logo

OPEC+ members voluntarily reduced oil production in the first quarter of 2024. (REUTERS/Dado Ruvic/File photo/Photos from Reuters)

OPEC+, the Organization of the Petroleum Exporting Countries and allies including Russia agreed late last week on voluntary production cuts of around 2.2 million barrels per day (bpd) for the first quarter of 2024.

This week, Saudi and Russian officials said the cuts were expected to prevent a build-up in oil inventories in the first quarter and could be extended or deepened.

Despite OPEC+ supply restrictions, prices have fallen nearly 11% since the November 29 agreement, the day before the OPEC+ meeting.

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On Wednesday, Russian President Vladimir Putin traveled to the United Arab Emirates and Saudi Arabia to meet with UAE President Sheikh Mohammed Bin Zayed Al Nahyan and Saudi Crown Prince Mohammed bin Salman. Oil and OPEC+ were on the agenda.

US crude oil futures prices reached their highest premium to immediate barrels, a sign of ample supply and growing fears of sluggish demand.

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