Oil prices fell on Thursday on a surprise U.S. crude inventory build, concerns about low demand and tensions in the Middle East, and are on track to break a three-day winning streak.
Brent crude futures were down 22 cents, or 0.3%, at $79.48 a barrel as of 03:03 GMT, while West Texas Intermediate (WTI) crude was down 22 cents, or 0.3%, at $74 a barrel.
Both benchmarks closed higher for a third consecutive session on Wednesday as investors worried about disruption to trade as major shipping companies opted to stay away from the Red Sea route and longer journeys increased shipping and insurance costs.
Market focus returned to sluggish global demand as the impact on the Red Sea is seen to be limited on oil as long as it does not spill over into the Strait of Hormuz.
US crude oil inventories increased by 2.9 million barrels to 443.7 million barrels in the week ended December 15 (contrary to analysts’ expectations for a decrease of 2.3 million barrels), the US Energy Information Administration (EIA) said on Wednesday.
The EIA also said U.S. crude production rose to a record 13.3 million barrels per day (bpd) last week, from a previous all-time high of 13.2 million bpd.
Regarding shipping, approximately 12% of world traffic passes through the Red Sea and the Suez Canal. However, analysts said the impact on oil supplies has been limited so far because most Middle Eastern crude is exported through the Strait of Hormuz.
Since there will be no additional production cuts by OPEC+ this year, oil prices will likely remain in the same range until the end of the year, focusing on key economic statistics and the US dollar’s reaction to them.
WTI is estimated to trade between $70 and $75 this month.
The U.S.-led coalition that imposes a price ceiling on seaborne Russian oil announced Wednesday changes to its compliance regime that the Treasury Department said would make it harder for Russian exporters to exceed the price ceiling.
