Oil Prices Extend Losses as US Stockbuild Eases Supply Concerns
Oil Prices Decline for Third Session
Oil prices continued their downward trend for a third consecutive session, driven by larger-than-expected crude and gasoline stockbuild in the US, which has eased supply concerns.
Decline in Crude and Gasoline Stockpiles
The fall in oil prices was influenced by a significant increase in crude and gasoline stockpiles in the US. Market sources, citing American Petroleum Institute figures, reported that oil stockpiles rose by approximately 12.9 million barrels, far surpassing the 500,000-barrel gain predicted by analysts in a Reuters poll. Additionally, gasoline inventories increased by 3.6 million barrels, contrary to expectations of an 800,000-barrel decrease. These figures have raised concerns about a potential slowdown in fuel demand in the US.
Impact on Fuel Consumption
Analysts have suggested that soaring fuel prices may be nearing consumers’ tolerance levels, leading to a reduction in fuel consumption. JP Morgan analysts noted that gasoline demand in PADD 5, the region including California, dropped by 100,000 barrels per day between June and September, reaching a seven-month low of 1.46 million barrels per day. This decline in demand reflects the impact of rising fuel costs on consumers.
Inventory Data from U.S. Energy Information Administration
Market participants are eagerly awaiting further inventory data from the U.S. Energy Information Administration (EIA), scheduled for release later today. This data will provide additional insights into the current supply and demand dynamics in the oil market.
Supplies in the Middle East
Concerns about the supply situation in the Middle East have started to ease, exerting downward pressure on oil prices. Analysts have highlighted that the Israel-Hamas conflict is unlikely to have a significant impact on the oil market, leading to a decrease in the risk premium associated with the region.
Expectations for the Second Half of 2023
Despite the recent decline in oil prices, the U.S. Energy Information Administration (EIA) predicts a further reduction in global oil inventories during the second half of 2023. This forecast suggests that global oil supply will remain below consumption levels, potentially bolstering oil prices.
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