Oil prices fell on Wednesday after an industry report showed an increase in crude oil inventories in the United States, the world's largest consumer, raising concerns about oversupply. However, the price decline was limited by sanctions against Russian oil, UNN reports with reference to Reuters.
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Brent crude futures were down 22 cents, or 0.3%, to $64.67 a barrel by 07:30 GMT (09:30 Kyiv time) after rising 1.1% in the previous session. U.S. West Texas Intermediate crude futures fell 17 cents, or 0.3%, to $60.57 a barrel after rising 1.4% on Tuesday.
U.S. crude and fuel inventories rose last week, market sources said late Tuesday, citing American Petroleum Institute data. Crude inventories rose by 4.45 million barrels in the week ended November 14, while gasoline inventories increased by 1.55 million barrels and distillate inventories by 577,000 barrels, API said, according to the sources.
"Overall, the report was relatively bearish," ING commodity strategists said, though they warned: "Market participants seem more concerned about supply risks than the prospect of a future surplus."
U.S. sanctions against major Russian producers Rosneft and Lukoil set a deadline for companies – November 21 – to cease cooperation with these Russian companies.
On Monday, the U.S. Treasury Department said that sanctions, which are already limiting Russia's oil revenues, are expected to lead to a reduction in its export volumes. Oil buyers in China and India have begun to switch to alternative suppliers.
"Underlying prices are range-bound, as the market tracks the impact of sanctions (November 21), although there is downward pressure amid oversupply," said Emril Jamil, senior oil analyst at LSEG.
Prices rose on Tuesday, as investors factored in the impact of U.S. sanctions and attacks on Russian refineries and export terminals, which heightened concerns about disruptions to oil and fuel supplies.
Concerns about supplies from Russia are weighed against analysts' forecasts that oil production exceeds current demand, putting pressure on prices.
After attacks on Russian energy and port facilities, diesel profitability in Europe rose sharply, reaching its highest level since September 2023 on Tuesday amid rising refinery margins worldwide.
"Oil prices found support in a strong diesel market, but the persistent oversupply of oil is making investors cautious about chasing further increases in oil prices," said analysts at Chinese brokerage Haitong Futures.
Official U.S. government oil inventory data will be released later on Wednesday. Eight analysts surveyed by Reuters ahead of the release estimated that crude inventories likely fell by an average of about 600,000 barrels in the week ended November 14.