Oil prices fall on US stock rise, higher supply
LONDON: Oil benchmark Brent crude hit a three-month low on Wednesday after a rise in US crude inventories highlighted increasing global supply and concerns over weak demand.
Brent fell 93 cents to a low of $71.23 a barrel, its weakest since April 17, before recovering slightly to around $71.45 by 09:00 GMT.
US light crude was down 60 cents at $67.48, not far off Tuesday’s onemonth low of $67.03 per barrel.
Oil markets have fallen over the last week as Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries and Russia increased production and as some supply disruptions eased.
“The correction in the oil price represents something of a convergence between fundamentals and physical realities,” said David Reid, lead crude market analyst at consultancy JBC Energy.
“We expect a fairly rapid lengthening in the (global oil supply) balance,” Reid added.
The US oil market has been tight this year but data on Tuesday from the American Petroleum Institute showed an unexpected rise of over 600,000 barrels in crude inventories.
Analysts had forecast a decline of 3.6 million barrels in US crude stocks for the week through July 13.
Data from the US government’s Energy Information Administration is due at 10:30 am EDT (14:30 GMT) on Wednesday.
“Oil is trading lower this morning on the back of the API release, and price action later today will largely depend on what the EIA release,” said ING commodities strategist Warren Patterson.
“A number broadly similar to the API could put some further pressure on the market later this afternoon.”