Oil prices fell for the third day on Thursday, driven by a larger-than-expected increase in crude and gasoline stocks in the United States and declining supply concerns.
Brent futures were down 43 cents, or 0.50%, at $85.39 a barrel at 06:23 GMT, while West Texas Intermediate (WTI) crude was down 53 cents, or 0.63%, at $82.96 a barrel.
Both indicators have given back most of their early-week gains after falling more than 2% in the previous session.
US crude oil inventories increased by approximately 12.9 million barrels, according to data from the American Petroleum Institute (API) on Wednesday. That’s much higher than the 500,000-barrel gain analysts expected.
API inventory values may not support sentiment this morning. Lower refinery operating rates due to routine maintenance likely contribute to this pattern.
The 3.6 million barrel increase in gasoline inventories was in stark contrast to the 800,000 barrel decrease expected by analysts and continued to raise concerns that fuel demand would slow in the United States.
Fuel prices may be closer to consumers’ tolerance threshold than inflation-adjusted prices suggest. There are already signs that consumers are responding by reducing fuel consumption.
In PADD 5, where California is the largest consumer, gasoline demand is estimated to have fallen by 100,000 barrels per day between June and September to a seven-month low of 1.46 million barrels per day.
Markets will be waiting for insights from oil stock data to be released later in the day (at 15:00 GMT) from the US Energy Information Administration (EIA).
Crude oil extended losses on signs that the impact of the Israel-Hamas war on the oil market will be limited. Market concerns about the supply situation in the Middle East continued to ease, putting downward pressure on prices.
The risk premium is decreasing as the conflict is largely controlled by Israel and Hamas.
However, EIA’s expectations that global oil stocks will decline further in the second half of 2023 limited downward pressure on the price. In its monthly report, the EIA stated that low inventories, which are estimated to keep the global oil supply below consumption, will likely increase oil prices.