HOUSTON: Oil prices slid 3% on Wednesday, with losses accelerating after US data showed crude and gasoline stockpiles unexpectedly surged last week after OPEC+ said it would raise its oil output target by just 100,000 barrels per day (bpd).
Brent crude futures were down $2.90, or 2.9%, at $97.61 a barrel by 12:17 p.m. ET (1617 GMT). West Texas Intermediate (WTI) crude futures fell $2.93, or 3.1%, to $91.49. Both contracts had seesawed previously.
The premium for front-month Brent futures over barrels loading in six months’ time is at a three-month low, indicating waning concern about tight supply. The same premium for WTI futures neared a four-month low.
US crude oil inventories rose unexpectedly last week as exports fell and refiners lowered runs, while gasoline stocks also posted a surprise build as demand slowed, the Energy Information Administration nL1N2ZF1LG said.
Crude stocks rose 4.5 million barrels last week, compared with an analyst forecast for a draw of 600,000 barrels. Gasoline stocks gained 200,000 barrels, versus expectations for a 1.6 million-barrel drop.?
“The crude oil number is well above expectations. Gasoline is a disappointment. You should never see a build in gasoline during summer. It’s a very bearish report,” said Bob Yawger, director of energy futures at Mizuho.
Ministers for the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, agreed to the small increase to the group’s output target, equal to about 0.1% of global oil demand.
July 2022 oil sales lowest since Feb 2021
Algerian oil production in September will rise to 1.57 million bpd, Energy Minister Mohamed Arkab told state television.
While the United States has asked the group to boost output, spare capacity is limited and Saudi Arabia may be reluctant to beef up output at the expense of Russia, hit by sanctions over the Ukraine conflict.
Ahead of the meeting, OPEC+ trimmed its forecast for the oil market surplus this year by 200,000 bpd to 800,000 bpd, three delegates told Reuters.
Also weighing on prices, top Iranian and US officials said they were travelling to Vienna to resume indirect talks about Iran’s nuclear programme, reviving the all but vanished hopes of a removal of sanctions hampering Iranian oil exports.
Prices were also hurt when San Francisco Fed President Mary Daly warned of a 75 basis point interest rate hike if inflation continued. Richmond Fed President Thomas Barkin also said that the Federal Reserve was committed to getting inflation under control and returning it to the US central bank’s 2% target.
The US dollar index, which tracks the greenback against six major peers, also rose, pressuring demand by making oil more expensive for holders of other currencies.