By Adedapo Adesanya
The oil market fell on Wednesday after a surprise jump in US crude stockpiles raised worries about demand, with Brent crude losing 79 cents or 1 per cent to close at $76.80 a barrel and the US West Texas Intermediate (WTI) crude declining by 87 cents or 1.2 per cent to $71.37 a barrel.
Prices had gained more than 1 per cent early in the session but reversed course after the US Energy Information Administration (EIA) reported a surprise build in crude oil stockpiles and larger-than-expected jumps in storage of gasoline and distillates.
The EIA estimated a relatively moderate inventory build in crude all and also reported sizeable increases in fuels for the first week of 2024.
In crude, the EIA reported an increase of 1.3 million barrels.
At 432.4 million barrels, inventories are about 2 per cent below the five-year average for this time of the year. The weekly change compared with a decline of 5.5 million barrels for the last week of 2023.
A day before the EIA report was released, the American Petroleum Institute (API) estimated a larger than expected decline in inventories, prompting a gain for oil prices.
The effect was reinforced by the EIA’s latest Short-Term Energy Outlook that projected oil demand will exceed supply by 120,000 barrels per day this year.
Europe’s weak economic outlook added to oil demand concerns as indications showed that the Eurozone may have been in recession last quarter and prospects remain weak.
Inflation in the bloc fell rapidly through most of 2023 but jumped back to 2.9 per cent last month, mostly on technical factors, and may hold around this level for some time.
Support came as investors remained worried about potential oil supply disruptions in the Middle East during the Israel-Hamas war.
The US said attacks by Yemen-based Houthi militants in the Red Sea were “escalatory” adding that the country will consult with its partners about next steps if they continue.
US Secretary of State Antony Blinken accused Iran of aiding Yemen’s Houthi attacks on merchant vessels in the Red Sea.
Meanwhile, the Houthis have also vowed to target US military vessels if the US moved to directly attack the group.
