Oil prices fell on Wednesday after industry data showed crude oil stockpiles rose more than expected and fuel inventories unexpectedly increased last week in the United States, the world’s largest oil consumer.
West Texas Intermediate (WTI) futures declined 62 cents, or 0.73%, to $83.72 a barrel after gaining 1.1% in the previous session.
Brent oil futures fell 70 cents, or 0.81%, to $85.44 a barrel after closing at the highest in seven years on Tuesday.Crude oil inventories rose 2.3 million barrels in the week ending Oct. 22, market sources citing American Petroleum Institute figures said late on Tuesday. That was more than the expectations for a 1.9 million barrel gain.
Gasoline inventories rose by 500,000 barrels and distillate stocks increased by 1 million barrels, compared with a forecast for both to drop.
With Brent rising the past eight weeks and WTI climbing for the past 10 weeks, prices are starting to look overbought, analysts said.
“Barring more bullish headlines, which is possible considering what we saw yesterday, we could see some profit-taking in Brent and WTI which would be healthy for the market,” said Craig Erlam, senior market analyst at OANDA.
Storage tanks at the Cushing, Oklahoma delivery hub for WTI oil have been depleted more than they have been in the last three years, while prices of longer dated futures contracts point to lower levels for months.
But a patchy recovery around the world from the worst health crisis in 100 years, after the COVID-19 pandemic dented demand for months on end, has often led to doubts over the sustainability of prices.
“Yesterday’s session was notable as we broke through the high seen in 2018 before a sharp sell-off occurred,” said a Singapore-based energy trader, referring to Brent’s gains.
That sell-off in 2018 came after concerns about a lack of supply turned into fears of a glut.
“Will history repeat itself or will we keep seeing prices move higher,” the trader said.