Oil prices dropped on Wednesday following industry data showing crude oil stockpiles increased more than anticipated.
Fuel inventories increased surprisingly last week in the United States, the world’s biggest oil consumer.
After closing at the highest level in seven years on Tuesday, Brent oil futures dropped 1.01 cents, or 1.2%, to $85.39 per barrel by 1050 GMT.
West Texas Intermediate (WTI) futures were under $1.19, or 1.4%, at $83.46 after reaching 1.1% in the prior session.
Both benchmarks settled near multi-year highs. They ended on Friday with a seventh continuous weekly gain. Significant producers continued back to supply and demand rebounds following easing epidemic constraints.
Crude oil inventories increased by 2.3 million barrels in the week closing on Oct. 22. Market sources stated late on Tuesday, quoting American Petroleum Institute figures. That was more than the anticipated 1.9 million-barrel gain.
Gasoline inventories increased by 500,000 barrels. Distillate stocks rose by 1 million barrels, compared with a prediction for both to fall.
Oil Prices Looking Overbought
Analysts said prices are starting to look overbought, with Brent growing for the past eight weeks and WTI climbing for the past ten weeks.
According to Craig Erlam, senior market analyst at OANDA, barring more bullish headlines, which is reasonable considering what we witnessed yesterday, we could recognize some profit-taking in Brent and WTI, which would be healthy for the market.
Storage tanks at the WTI oil delivery hub in Cushing, Oklahoma, are more worn than they have been in the past three years, with prices for longer-dated futures contracts leading to supplies staying at those levels for months.
Nevertheless, an inconsistent recovery worldwide from the worst health crisis in 100 years has often pointed to uncertainties over the sustainability of oil prices.
Stephen Brennock of oil broker PVM stated that the global oil market is still at risk because of not fully containing the COVID-19 and its variants.
A flare-up in cases over the summer showed heavily on prices. This could feasibly happen again if the situation worsens.
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