Oil prices dropped for a second session on Thursday, under pressure from an unexpected rise in U.S. crude stocks that raised concerns over demand after prices rallied to multi-year highs.
U.S. West Texas Intermediate (WTI) oil slid 0.37%, or 28 cents, to $76.62 a barrel, after the market climbed on Wednesday to $79.78, the highest since November 2014.
“Commercial stockpiles of crude rose… last week, according to EIA data,” ANZ said in a note. “Stockpiles of gasoline also surged, raising concerns of weaker demand.”
U.S. crude inventories rose by 2.3 million barrels last week, the U.S. Energy Information Administration (EIA) said, against expectations for a modest dip of 418,000 barrels. Gasoline inventories also rose, while distillate inventories were down slightly.
Global oil prices have jumped more than 50% this year, adding to inflationary pressure that could slow recovery from the COVID-19 pandemic and impact consumer demand. Natural gas and coal prices have also climbed.
The Organization of the Petroleum Exporting Countries and allies (OPEC+) said on Monday it would stick to its pact for a gradual increase in oil output, sending crude prices to multi-year highs.
“The producer group’s statement that its approach should reduce market volatility contrasts with the higher volatility that comes with tighter markets, especially when inventories are historically low,” analysts from Citi said in a note.
“Near-term, oil price movements look skewed to the upside, given growing market tightness with higher Chinese buying and incremental oil demand from the critically tight gas market for the power sector.”
OPEC+’s decision to raise oil output modestly and gradually, despite this year’s surge in prices, was partly driven by concern that demand and prices could weaken, sources close to the group told Reuters.