Crude Oil prices continued to slide on Thursday, marking a second consecutive day of declines, primarily due to significant increases in U.S. fuel inventories. Brent crude futures dropped 8 cents to $76.08 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 11 cents to $73.21. Both benchmarks experienced a slight decrease of about 0.1% from the previous session.
The decline in prices follows a larger-than-expected rise in gasoline and distillate stockpiles. According to the U.S. Energy Information Administration, gasoline stocks surged by 6.3 million barrels last week, reaching a total of 237.7 million barrels—well above analysts’ expectations of a 1.5 million-barrel increase. Similarly, distillate inventories rose by 6.1 million barrels, compared to an anticipated increase of only 600,000 barrels.
Despite the rising inventories putting downward pressure on prices, concerns about tighter supply and expectations for increased winter fuel demand have limited the decline. Analysts at JPMorgan project that oil demand will grow by 1.4 million barrels per day in January, driven largely by increased heating fuel usage due to colder weather in the Northern Hemisphere.
Additionally, the market structure indicates that traders are becoming increasingly worried about supply tightening even as demand rises. The premium for the first-month Brent contract over the six-month contract has reached its widest level since August, signaling potential supply constraints.
Looking ahead, factors such as China’s demand trends and the new U.S. administration’s energy policies will be closely monitored by traders, who may hold off on making large moves until President-elect Donald Trump takes office on January 20.
While crude oil prices are currently facing downward pressure from rising inventories, expectations for winter demand and potential supply tightness are keeping the market on edge
Until then, Happy Trading!
Commodity Samachar Securities
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