Oil falls on US crude inventories, supply concerns limit damage

SINGAPORE: Oil prices eased on Wednesday after industry data showed US crude stockpiles rose more than expected, but losses were capped by supply worries. Brent crude for December delivery fell 72 cents, or 0.8%, to $92.80 a barrel by 03:30 GMT, after gaining 26 cents in the previous session.
US West Texas Intermediate (WTI) crude oil futures for December delivery fell 48 cents, or 0.6%, to $84.84, reversing gains from the previous session.
“The prospect of a global economic slowdown and tighter monetary policy have cast the specter of a supply cut in recent weeks,” ANZ Research analysts said in a note.
U.S. crude inventories rose by about 4.5 million barrels in the week ending Oct. 21, according to market sources citing data from the American Petroleum Institute, an industry group.
The figure was higher than the expectations of five analysts polled by Reuters, who on average expected an increase of about 200,000 barrels.
While rising crude inventories have raised concerns that a global recession will cut demand, continued supply constraints keep prices trading in a tight range.
Stephen Innes, managing partner at SPI Asset Management, told Reuters: “The OPEC production cuts come into effect from November and new EU sanctions on Russian oil to be implemented from December will have a positive effect (on price)”.
As for the wide WTI-Brent spread in recent sessions, Innes added that WTI buyers are watching for any further interference by President Joe Biden ahead of the US midterm elections on Nov. November 8
Last week, Biden announced plans to sell off the rest of the record release from the nation’s emergency oil stockpile later in the year as he tries to bring down high gasoline prices.
A stronger dollar also affected the market on Wednesday. The dollar index, which measures the greenback against six major currencies, inched up 110.98 by 03:30 GMT.
A stronger dollar reduces demand for oil because it makes crude more expensive for holders of other currencies.
While opposing the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, collectively known as OPEC+, to cut oil production, the White House on Tuesday welcomed the moves. Saudi stance to help Ukraine in its war with Russia. .
Biden, facing criticism for high inflation, has warned Saudi Arabia will face consequences if it aligns with Russia and agrees to reduce crude oil supplies.
Meanwhile, official US stockpiles data from the government’s Energy Information Administration is due on Wednesday at 1430 GMT.


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