TOKYO- Oil prices fell on Wednesday for a second straight day, with Brent hitting its lowest in two weeks after official figures showed a surprise jump in US inventories of crude.
Brent crude dropped $1.36, or 1.6 percent, to $83.22 a barrel, a two-week low, having declined by 2.1 percent in the previous session.
US oil fell $1.28, or 1.6 percent, to $81.38 a barrel, a one-week low, after dropping 2.4 percent on Wednesday.
Crude stocks rose by 4.3 million barrels last week, the US Energy Department said, more than double the 1.9 million-barrel gain forecast by analysts.
The “hefty” stock build came “on the back of a large jump in net imports of crude oil and still sluggish refinery processing,” Citi Research commodities analysts said in a note.
Still, gasoline stocks fell by 2 million barrels to the lowest in nearly four years, even as US consumers struggle with rising prices to fill their tanks.
At the WTI delivery hub in Cushing, Oklahoma, crude storage is the most depleted in three years, with prices for longer-dated futures contracts indicating supplies will stay low for months.
US crude stocks rose more than expected in the latest week, the government reported on Wednesday, but inventories at the Cushing, Oklahoma, storage hub dropped sharply again, suggesting markets remain tight due to steady demand and stagnant production.
Crude inventories in the week to Oct. 22 rose by 4.3 million barrels to 430.8 million barrels, the US Energy Information Administration said, a much bigger rise than the 1.9 million barrels analysts had expected.
However, stocks at the Cushing, Oklahoma, delivery hub fell by 3.9 million barrels in the week to 27.3 million barrels, the lowest since October of 2018.
Stocks have remained low at Cushing as US output has been slow to rebound from the depths of the pandemic. Production was steady at 11.3 million barrels per day (bpd) in the most recent week, far below the late 2019 peak of nearly 13 million bpd.
Despite the fall in stocks at Cushing, the Gulf Coast’s inventories rose to 247 million barrels in the week, partly due to a net increase in imports which hit their highest since June.
“As bad as things are with Cushing, we are flush with crude oil in the Gulf Coast. But massive draws in the delivery hub for the futures contract is a red flag,” said John Kilduff, partner at Again Capital LLC in New York.
Later-dated futures contracts are trading at lower prices than the current contract, indicating heavy demand for oil on a prompt basis. US crude futures were down $1.25, or 1.5 percent, to $83.40 on the day as of 10:52 a.m. EDT (1452 GMT) while Brent dropped $1.35, or 1.6 percent, to $85.05 a barrel. – Reuters
