Oil prices fell nearly 4% on Wednesday to a six-month low after US data showed crude and gasoline stockpiles unexpectedly increased last week and OPEC+ announced it would raise its oil production target by 100,000 barrels per day (bpd).
Brent crude futures fell $3.76, or 3.7%, to $96.78 per barrel, the lowest since Feb. 21.
West Texas Intermediate (WTI) crude futures fell $3.76, or 4%, to $90.66.
Both contracts fluctuated during the session.
Over a six-month period, the barrel-loading premium for front-month Brent futures is at a three-month low, indicating that concerns about supply shortages have subsided. The same premium for WTI futures has approached a four-month low.
The Energy Information Administration (EIA) said U.S. crude inventories rose unexpectedly last week as exports slumped and despite refineries slashed output, while gasoline inventories rose by surprise as demand slowed.
Crude oil inventories rose 4.5 million barrels last week, compared to analysts’ estimate of 600,000 barrels. Gasoline inventories increased by 200,000 barrels, against expectations of a decrease of 1.6 million barrels.
The number of crude oil is well above expectations. Gasoline is a disappointment. The increase in gasoline stocks in summer indicates a downward pressure on prices.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, agreed to a small increase in the group’s production target, which equates to about 0.1% of global oil demand.
The White House focuses on keeping oil prices low. OPEC+ decided on a small increase of 100,000 bpd despite US demand for a more meaningful supply increase
Prior to the meeting, OPEC+ cut its forecast for this year’s oil market surplus by 200,000 bpd to 800,000 bpd, three delegates said.
Also, about the nuclear program, which is putting pressure on prices, Iranian and US officials said that by resuming indirect talks, reviving the all but vanished hopes of removal of sanctions hampering Iranian oil exports.
On the demand side, Federal Reserve officials on Wednesday voiced their determination to rein in high inflation, but one said the US central bank’s key rate hike by half a percentage point next month may be enough to move toward that target.
The US dollar index, which tracks its value against the six major currencies, also rose, making oil more expensive for holders of other currencies, and depressing the demand down.
However, the Caspian Pipeline Consortium (CPC), which connects Kazakh oil fields to the Russian Black Sea port of Novorossiisk, has helped oil prices without giving figures, saying supply has dropped significantly.
