Oil prices declined by 1% on Wednesday, driven by a smaller-than-expected draw in U.S. crude stockpiles and continued concerns over Chinese demand. Brent crude futures fell by 90 cents, or 1.13%, to settle at $78.65 a barrel, while U.S. West Texas Intermediate crude futures dropped $1.01, or 1.34%, to $74.52. This follows a more than 2% price drop on Tuesday, despite a 7% gain over the previous three days.
Data from the Energy Information Administration revealed U.S. crude inventories decreased by 846,000 barrels to 425.2 million barrels last week, significantly less than the 2.3 million barrels draw analysts had predicted. Refining activity did increase, with Matt Smith, lead oil analyst at Kpler, noting the incongruity of a small crude draw despite strong refinery runs. Contributing factors included ongoing strength in imports and a slight decrease in exports.
China’s economic struggles and slowing oil demand from refiners also contributed to price pressures. Analyst Amarpreet Singh from Barclays commented that the anticipated rebound in Chinese demand has yet to materialize.
Conversely, supply risks in the Middle East and Libya somewhat mitigated the price decline. Libyan oil production is threatened by political disputes, risking about 1.2 million barrels per day. UBS analyst Giovanni Staunovo highlighted the need for a noticeable drop in Libyan crude exports to confirm market tightening.
Additionally, geopolitical tensions persist in the Middle East, with ongoing violence between Israel and Hamas, and recent exchanges of fire between Israel and Hezbollah across the Lebanese border, maintaining global crude oil market volatility. These geopolitical risks continue to keep oil prices in flux, as noted by Tim Snyder, chief economist at Matador Economics.
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Original Story https://www.livemint.com/news/world/oil-prices-fall-1-after-us-crude-stocks-draw-libya-supply-risks-limit-losses-11724871037938.html
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