NEW YORK: Oil prices fell on Wednesday after a surprise jump in US crude stockpiles raised worries about demand in the largest oil market.
Global benchmark Brent crude oil futures fell 21 cents, or 0.3%, to $77.38 a barrel. US West Texas Intermediate crude futures fell 10 cents to $72.14 a barrel.
Early in the session, both contracts had risen by more than a dollar before the US Energy Information Administration reported a surprise build in crude oil stockpiles and larger-than-expected jumps in storage of gasoline and distillates.
“Today’s EIA report highlights investor concerns of slowing demand growth,” said Rob Haworth, senior investment strategist at US Bank Asset Management.
US crude inventories rose by 1.3 million barrels in the week ended Jan. 5 to 432.4 million barrels, compared with analysts’ expectations in a Reuters poll for a 700,000 barrel drop. Gasoline stocks rose by 8 million barrels while distillate stocks jumped by 6.5 million barrels, the EIA reported.
“Investors appear caught between ongoing conflicts, which are escalating oil transit costs in parts of the world, soft global economic growth and potential Federal Reserve interest rate cuts starting in March, which could spur economic activity,” Haworth said. Europe’s weak economic outlook also added to oil demand concerns. The euro zone may have been in recession last quarter and prospects remain weak, European Central Bank Vice President Luis de Guindos said on Wednesday.
Limiting some losses, investors continue worry about potential supply concerns in the Middle East arising from the Israel-Hamas war. On Sunday Libya’s National Oil Corporation (NOC) declared force majeure at its Sharara oilfield, which can produce up to 300,000 barrels per day.
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