On Thursday, oil prices pulled back from multi-month highs reached in the previous session due to increased U.S. crude inventory and sluggish economic data from China, which sparked concerns regarding global fuel demand.
As of the report writing, Brent crude declined by 9 cents, or 0.1 percent, to reach $87.59 per barrel, following its highest settlement since January 27 in the previous session.
West Texas Intermediate crude (WTI) reached $84.34, marking a recording high since November 2022.
According to data from the U.S. Energy Information Administration on Wednesday, U.S. crude inventories increased by 5.9 million barrels during the last week, reaching a total of 445.6 million barrels. This figure exceeded analysts’ expectations from a Reuters poll, which predicted a rise of 0.6 million barrels.
According to the data, U.S. crude oil exports experienced the largest decline on record, dropping by 2.9 million barrels per day last week to reach 2.36 million barrels per day (bpd). However, Phil Flynn, an analyst at Price Futures Group, mentioned that the market anticipates an increase in crude exports due to the U.S. crude futures and Brent spread.
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According to government data, U.S. gasoline stocks experienced a decline of 2.7 million barrels last week, while distillate inventories, including diesel and heating oil, decreased by 1.7 million barrels. This contrasted with analysts’ expectations from a Reuters poll, which predicted relatively stable levels for both categories.
Positive impact
The ongoing declines in refined products remain positive for the oil market, stated Andrew Lipow, President of Lipow Oil Associates in Houston.
Despite a larger-than-anticipated 5.85 million-barrel increase in U.S. crude stocks, market reactions were mostly indifferent following a previous week’s record drawdown.
The drawdown in U.S. fuel stocks provided some balance by mitigating concerns about demand, particularly in light of Chinese data indicating an 18.8 percent decline in crude oil imports in July compared to the previous month, resulting in the lowest daily rate since January.
Saudi support
Support for oil prices was provided by Saudi Arabia’s intention to extend its voluntary production cut of 1 million barrels per day for an additional month, encompassing September. Additionally, Russia announced a reduction in oil exports by 300,000 barrels per day for the month of September.
According to state media reports, on Tuesday, the cabinet of Saudi Arabia reiterated its backing for precautionary measures taken by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to stabilize the market.
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