Oil slips as U.S. crude stockpiles rise
Crude oil prices fell Wednesday after industry data showed U.S. crude inventories unexpectedly increased last week.
Brent crude futures fell 23 cents, or 0.2%, to $96.08 a barrel at 0323 GMT.
U.S. West Texas Intermediate crude futures declined 28 cents, or 0.3%, to $90.22 a barrel.
U.S. crude inventories increased by about 2.2 million barrels in the week ending Aug. 5, market sources said, citing figures from the American Petroleum Institute. [API/S]
Analysts polled by Reuters had expected crude inventories to rise by about 100,000 barrels. [EIA/S]
Official government data is due on Wednesday at 10:30 a.m. EDT.
“Whatever crude demand destruction that occurs from a weakening global economy won`t be able to drag down oil prices much lower given how low the supply outlook remains,” said Edward Moya, senior market analyst at OANDA.
“Much attention is falling on Iran nuclear deal talks and that could be a wildcard in providing much needed supplies.”
The European Union (EU) on Monday presented a “final” document reviving the 2015 Iran nuclear deal that boosted Iran’s oil exports. A senior EU official said he expected a final decision on the proposal “within a very few weeks”.
Both oil benchmarks were rocky on Tuesday, both up and down by more than $1 a barrel during the session, but they settled slightly lower as investors weighed recessionary concerns with news that some oil exports had been suspended on the Russia-to-Europe Druzhba pipeline that transits Ukraine.[O/R]
Ukraine has halted the flow of oil on the Druzhba oil pipeline to parts of Central Europe as Western sanctions have made Moscow unable to pay its tolls.
Flows along the southern route of the Druzhba pipeline have been affected while the northern route serving Poland and Germany was uninterrupted.
Czech pipeline company MERO said it expected Russian oil supplies to the Czech Republic via the Druzhba pipeline to resume within a few days.
Kazakhstan’s giant Kashagan oil field operators are replenishing supplies and are gradually starting to restore production after last week’s emergency stoppage due to a gas leak.The Kashagan field is producing about 300,000 barrels per day.
Concerns over a possible global recession have weighed on oil futures recently, but U.S. refiners and pipeline operators are expected to reduce energy costs in the second half of 2022, according to a Reuters review of corporate earnings reports. There is an anticipated significant increase in consumption.