Oil fell to its lowest level in 6 months after a surprise US crude oil and a gasoline increase

A poster with crude oil written on the side of a storage tank in the Permian Basin in Menton, Loving County, Texas, United States, November 22, 2019. REUTERS/Angus Mordant

HOUSTON (Reuters) – Oil prices fell nearly 4% on Wednesday to their lowest in nearly six months, after US data showed crude and gasoline stocks rose unexpectedly last week, and with OPEC+ announcing it would raise its oil production target by 100,000 barrels. per barrel. Today (barrels per day).

Brent crude futures closed down $3.76, or 3.7%, at $96.78 a barrel. This was its lowest settlement since February 21.

West Texas Intermediate (WTI) crude futures fell $3.76, or 4%, to $90.66, the lowest settlement since February 10, and the contract reached a session low of $90.38 a barrel, the lowest since February 25.

Both contracts swung during the session.

The premium for Brent crude futures next month to loading barrels within six months has reached its lowest level in three months, indicating a waning concern about a supply shortage. The same premium for West Texas Intermediate crude futures is close to a four-month low.

The Energy Information Administration said that US crude oil stocks rose unexpectedly last week as exports fell and refineries cut inflows, while gasoline stocks also recorded a surprise increase as demand slowed.

Crude stocks rose 4.5 million barrels last week, compared to analyst expectations for a draw of 600,000 barrels. Gasoline stocks rose 200,000 barrels, versus expectations for a 1.6 million barrel decline.

“Crude oil numbers are much higher than expected. Gasoline is disappointing. You should never see an increase in gasoline over the summer. It’s a very bearish report,” said Bob Yuger, director of energy futures at Mizuho Bob Yuger.

Ministers of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, agreed to slightly increase the group’s production target, equal to about 0.1% of global oil demand. Read more

While the United States has asked the group to increase production, spare capacity is limited and Saudi Arabia may be reluctant to increase production at the expense of Russia, which has been hit by sanctions over the conflict in Ukraine.

The White House said the Biden administration is focused on keeping oil prices low.

Three delegates told Reuters that before the meeting, OPEC + cut its forecast for the oil market surplus this year by 200,000 barrels per day to 800,000 barrels per day. Read more

Also weighing on prices, Iranian and US officials said they were traveling to Vienna to resume indirect talks on Iran’s nuclear programme, reviving fading hopes of lifting sanctions that hamper Iranian oil exports. Read more

On the demand side, Fed officials again expressed their determination on Wednesday to rein in high inflation, although one said a US central bank rate hike next month might be enough to move towards that goal. Read more

The US dollar index, which measures the greenback against six major peers, also rose, squeezing demand by making oil more expensive for holders of other currencies.

However, oil prices helped the Caspian Sea Pipeline Consortium (CPC), which connects Kazakh oil fields to the Russian Black Sea port of Novorossiysk, saying that supplies had fallen dramatically, without providing figures. Read more

Additional reporting by Laila Kearney and Stephanie Kelly in New York, Shadia Nasrallah in London, Sonali Paul and Emily Chow; Editing by Margarita Choi, David Goodman and David Gregorio

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