Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Oil slides 2% on rising U.S. fuel stocks and output

Commodities Jun 29, 2022 03:42PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A worker uses a petrol pump at a Brazilian oil company Petrobras gas station in Brasilia, Brazil March 7, 2022. REUTERS/Adriano Machado/File Photo/File Photo

By David Gaffen

NEW YORK (Reuters) -Oil prices slid about 2% on Wednesday as a rise in U.S. gasoline and distillate inventories and worries about slower economic growth around the world offset ongoing concerns about tight crude supplies.

Brent futures for August delivery fell $1.72, or 1.5%, to settle at $116.26 a barrel. The August contract will expire on Thursday and the more-active September contract was down $1.35 to $112.45.

U.S. West Texas Intermediate crude for August fell $1.98, or 1.8%, to settle at $109.78.

The Energy Information Administration (EIA) said U.S. crude inventories fell last week even as production hit its highest level since April 2020 during the first wave of the coronavirus pandemic. Fuel stocks rose as refiners ramped up activity, operating at 95% of capacity, the highest for this time of year in four years. [EIA/S]

"The EIA report put a damper on the market. The rise in gasoline and distillate inventories eases the pressure a bit and the uptick in U.S. production also factored into the price decline," said John Kilduff, partner at Again Capital LLC in New York.

Those surprise inventory gains caused U.S. gasoline and distillates futures to drop about 3% and 4%, respectively. Traders said crude futures followed the fuel prices lower.

Also putting pressure on oil was a rise in the U.S. dollar against a basket of other currencies to its highest since hitting a 19-year high in mid June. A stronger dollar makes oil more expensive for buyers using other currencies.

Brent and WTI gained about 7% over the prior three sessions on worries about tight supplies due in part to Western sanctions on Russia.

"Given that almost 1/5 of global oil producing capacity today is under some form of sanctions (Iran, Venezuela, Russia), we believed there is no practical way to keep these barrels out of a market that was already exceptionally tight," JP Morgan said in a research note.

But investors are also concerned that slowing economies could dent energy demand as central banks hike interest rates to battle inflation.

The U.S. Federal Reserve will not let the economy slip into a "higher inflation regime" even if it means raising interest rates to levels that put growth at risk, Fed Chair Jerome Powell said.

Uncertainty in global oil and gas markets could stay for some time to come as spare capacity is very low while demand is still recovering, Shell (LON:RDSa) PLC Chief Executive Officer Ben van Beurden said.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies such as Russia that form the OPEC+ group, began a series of two-day meetings on Wednesday with sources saying chances of a big policy change look unlikely this month.

Analysts are concerned that Saudi Arabia and the United Arab Emirates (UAE) may not have enough spare capacity to make up for lost Russian supply. French President Emmanuel Macron said this week he was told these producers will struggle to increase output further.

However, the UAE energy minister said the country, which is producing about 3 million bpd, has some spare capacity above its OPEC quota of 3.17 million bpd.

Analysts also warned that political unrest in Ecuador and Libya could tighten supply further.

In Russia, the Black Sea Caspian Pipeline Consortium (CPC) terminal will resume loading oil from its second single mooring point on July 1.

Oil slides 2% on rising U.S. fuel stocks and output
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (4)
Rebel Arya
Rebel Arya Jun 29, 2022 10:00AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
America looks for his profit and make crude price higher day by day
Rebel Arya
Rebel Arya Jun 29, 2022 9:59AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
very soon crude will be 150$ per barrel
Darren Hunt
Darren Hunt Jun 29, 2022 8:57AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Russia and Nato in a war this fall , oil could go through the roof. Be prepared
Pubg BALIUCH
Pubg BALIUCH Jun 28, 2022 10:28PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hshsbsiiw
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email