Oil prices continued to decline on Thursday, pressured by a sharp increase in U.S. fuel inventories last week, though worries about tighter supplies from OPEC members and Russia limited the losses.
Brent crude futures slipped 25 cents, or 0.3%, to $75.94 a barrel by 09:25 GMT, while U.S. West Texas Intermediate crude futures fell 32 cents, or 0.4%, to $73.03. Both benchmarks dropped over 1% on Wednesday, weighed down by a stronger dollar and larger-than-anticipated U.S. fuel stockpile builds.
The Energy Information Administration (EIA) reported on Wednesday that U.S. gasoline inventories rose by 6.3 million barrels last week to 237.7 million barrels, significantly above analysts’ expectations of a 1.5 million-barrel build. Distillate stockpiles increased by 6.1 million barrels to 128.9 million barrels, compared to analysts’ prediction of a 600,000-barrel advance. However, crude inventories fell by 959,000 barrels, exceeding the anticipated 184,000-barrel draw.
Oil market experts note that rising U.S. fuel inventories are driving some selling, but the impact is tempered by winter demand in the northern hemisphere. They also highlight that traders are cautious ahead of potential shifts in China’s energy demand and U.S. policy directions, particularly regarding the Russia-Ukraine conflict.
The Brent futures first-month contract premium to the six-month contract widened to its largest gap since August 2024, signalling concerns over tightening supply and expectations of increased Chinese demand.
A Reuters survey showed OPEC oil output fell in December after two months of increases, as field maintenance in the UAE offset production gains in Nigeria and other member nations. Meanwhile, Bloomberg reported that Russia's oil production averaged 8.971 million barrels per day in December, falling short of the country's target.