On Wednesday, oil prices experienced a sharp decline of more than 4% in response to reports suggesting that Russia might soon lift its diesel ban and US government data indicating weak gasoline demand.
Brent crude oil futures plummeted by $3.88, or 4.3%, settling at $87.04 per barrel. Simultaneously, US West Texas Intermediate crude (WTI) dropped by $3.87, or 4.3%, reaching $85.36.
Both benchmarks hit session lows, dropping by more than $4, with heating oil and gasoline futures falling by 5%.
The US Energy Information Administration (EIA) reported a decrease of 2.2 million barrels in nationwide crude stocks, totaling 414.1 million barrels in the week ending September 29. However, stocks at Cushing, Oklahoma, the WTI delivery hub, increased for the first time in eight weeks. Gasoline stocks surged by 6.5 million barrels, significantly surpassing the expected rise of 200,000 barrels. Finished motor gasoline supplied dwindled to about 8 million barrels per day, marking its lowest point since the beginning of the year.
The sudden decline in oil prices coincides with growing concerns about high interest rates and the global economy, which have unsettled both equity and bond markets in the past few weeks. If this trend continues, it could alleviate inflationary concerns, especially as central bankers, including those at the Federal Reserve, are deliberating whether they have raised borrowing costs sufficiently. The upcoming monthly US jobs data on Friday will be closely analyzed for insights into the overall health of the economy.
According to Reuters, Matthew Smith, lead oil analyst at Kpler, noted, “We are reaching the peak of seasonal refinery maintenance, yet gasoline inventories built strongly amid much weaker implied demand.”
According to a Bloomberg report, the key OPEC+ players, Saudi Arabia and Russia, affirmed their commitment to maintaining supply cuts, amounting to approximately 1.3 million barrels a day. These restrictions have played a significant role in depleting inventories, with US stocks at the Cushing site approaching levels deemed necessary for operational stability.
This decline in oil prices comes as a relief for major buyers, particularly in Asia. Earlier in the week, Oil minister Hardeep Puri emphasized the need for oil prices to reach around $80 a barrel to benefit consumers.
In addition to supply-demand concerns, economic news also contributed to the pressure on oil prices. Data showed a slowdown in growth in the US services sector for September.
Furthermore, the daily Kommersant reported that Russia might be on the verge of easing its diesel ban in the coming days, citing anonymous sources. The OPEC+ Joint Ministerial Monitoring Committee (JMMC) kept the group’s output policy unchanged during its online meeting.
(With inputs from agencies)
Brent crude oil futures plummeted by $3.88, or 4.3%, settling at $87.04 per barrel. Simultaneously, US West Texas Intermediate crude (WTI) dropped by $3.87, or 4.3%, reaching $85.36.
Both benchmarks hit session lows, dropping by more than $4, with heating oil and gasoline futures falling by 5%.
The US Energy Information Administration (EIA) reported a decrease of 2.2 million barrels in nationwide crude stocks, totaling 414.1 million barrels in the week ending September 29. However, stocks at Cushing, Oklahoma, the WTI delivery hub, increased for the first time in eight weeks. Gasoline stocks surged by 6.5 million barrels, significantly surpassing the expected rise of 200,000 barrels. Finished motor gasoline supplied dwindled to about 8 million barrels per day, marking its lowest point since the beginning of the year.
The sudden decline in oil prices coincides with growing concerns about high interest rates and the global economy, which have unsettled both equity and bond markets in the past few weeks. If this trend continues, it could alleviate inflationary concerns, especially as central bankers, including those at the Federal Reserve, are deliberating whether they have raised borrowing costs sufficiently. The upcoming monthly US jobs data on Friday will be closely analyzed for insights into the overall health of the economy.
According to Reuters, Matthew Smith, lead oil analyst at Kpler, noted, “We are reaching the peak of seasonal refinery maintenance, yet gasoline inventories built strongly amid much weaker implied demand.”
According to a Bloomberg report, the key OPEC+ players, Saudi Arabia and Russia, affirmed their commitment to maintaining supply cuts, amounting to approximately 1.3 million barrels a day. These restrictions have played a significant role in depleting inventories, with US stocks at the Cushing site approaching levels deemed necessary for operational stability.
This decline in oil prices comes as a relief for major buyers, particularly in Asia. Earlier in the week, Oil minister Hardeep Puri emphasized the need for oil prices to reach around $80 a barrel to benefit consumers.
In addition to supply-demand concerns, economic news also contributed to the pressure on oil prices. Data showed a slowdown in growth in the US services sector for September.
Furthermore, the daily Kommersant reported that Russia might be on the verge of easing its diesel ban in the coming days, citing anonymous sources. The OPEC+ Joint Ministerial Monitoring Committee (JMMC) kept the group’s output policy unchanged during its online meeting.
(With inputs from agencies)
