Oil Prices Decline Amid Concerns of Oversupply

SadaNews - Oil prices fell on Wednesday after a report from the sector showed an increase in crude and fuel inventories in the United States, the world's largest oil consumer, which heightened growing concerns that supply exceeds demand in the market.

Brent crude futures dropped by 0.2% to $64.76 a barrel, following a rise of 1.1% in the previous session.

U.S. West Texas Intermediate crude futures also fell by about 0.1% to $60.65 a barrel, after gains of 1.4% on Tuesday.

Market sources indicated on Tuesday evening that crude and fuel inventories in the U.S. rose last week, based on data from the American Petroleum Institute.

According to figures reported by the sources from the Institute, crude inventories increased by 4.45 million barrels in the week ending November 14, while gasoline stocks rose by 1.55 million barrels, and distillate inventories grew by 577,000 barrels.

A report released on Wednesday by the Chinese brokerage "Haitong Futures" stated that the Institute's data showing an increase in crude and fuel inventories "indicates weak demand and provides negative expectations for oil prices."

Official data on U.S. government inventories is set to be released later on Wednesday. Eight analysts surveyed by Reuters prior to the data release estimated that crude inventories may have declined by about 600,000 barrels during the week ending November 14.

Prices rose on Tuesday as investors assessed the impact of U.S. sanctions on Russian oil exports, with increasing Ukrainian attacks targeting Russian refineries and export terminals, raising fears of potential disruptions in crude and fuel supplies.

These supply concerns regarding Russia are met with analysts' expectations that oil production exceeds current demand levels, which is putting pressure on prices.

After the Ukrainian attacks on Russian energy facilities and ports, diesel production margins in Europe soared to their highest levels since September 2023 on Tuesday, amid rising refining margins globally.

The "Haitong" report noted that "oil prices are supported by the strength of the diesel market, but the oversupply of crude keeps investors hesitant to pursue further gains in the market."