Oil prices faced a further decline on Wednesday, following the release of US stockpile data, which revealed an increase in crude oil inventories. US crude oil futures were trading just above $83 per barrel, while Brent crude futures hovered around $87.50 per barrel. The previous day, the US crude oil benchmark for December delivery dropped by $1.75 to $83.74 a barrel, and Brent crude for December delivery fell by $1.76 to $88.07 a barrel.
The Energy Information Administration (EIA) reported a substantial increase in US crude oil stockpiles for the week ending October 20, as refinery utilization experienced a decline, and gasoline inventories unexpectedly expanded. US oil inventories grew by 1.4 million barrels during the week, reaching 421.1 million barrels in total. Refinery crude runs decreased by 207,000 barrels per day in the same period, and refinery utilization rates fell by 0.5 percentage points, reaching 85.6% of total capacity.
Earlier on Wednesday, oil prices exhibited relative stability as concerns about demand countered apprehensions regarding the conflict in the Middle East. Analysts speculated that Europe’s grim economic outlook might negatively impact oil demand. Various macroeconomic indicators such as industrial output data, purchasing managers’ surveys, and sentiment readings all pointed to economic contraction in the Eurozone.
The ongoing intensification of Israeli strikes in southern Gaza was widely reported, with record numbers of Palestinian casualties. An escalation in the Israel-Hamas conflict throughout the Middle East region could disrupt crude oil supplies. Moreover, crude oil may receive support from China, the world’s largest oil importer, as the parliamentary body approved a bill to issue 1 trillion yuan (approximately $137 billion) in sovereign bonds to stimulate the economy.
The EIA data revealed a reduction in distillate stockpiles, which include diesel and heating oil, by 1.7 million barrels for the week, reaching a total of 112.1 million barrels. However, crude stocks at the Cushing, Oklahoma, delivery hub rose by 213,000 barrels during the same week. Additionally, the EIA data indicated that net US crude imports increased by 539,000 barrels per day in the same period.
Oil prices are subject to a complex interplay of factors, and global events often have a significant impact on market dynamics. As such, oil traders and investors continuously monitor geopolitical developments, economic indicators, and supply-and-demand metrics to make informed decisions. The EIA’s weekly reports provide valuable insights into the state of US oil inventories and the factors influencing oil prices, helping market participants navigate these volatile waters.