Oil prices dropped for a second session Thursday, under pressure from an unexpected rise in U.S. crude stocks that raised concerns over demand after prices rallied to multi-year highs.
U.S. crude dipped 0.34% to $77.17 a barrel, extending a fall from late on Wednesday after hitting a seven-year high of $79.78 earlier that day.
“Commercial stockpiles of crude rose … last week, according to EIA data,Stockpiles of gasoline also surged raising concerns of weaker demand.” ANZ said in a note.
U.S. crude inventories rose by 2.3 million barrels last week, the U.S. Energy Information Administration (EIA) said, against expectations for a modest dip of 418,000 barrels. Gasoline inventories also rose, while distillate inventories were down slightly.
Oil rallied to the highest since 2014 this week as an energy crunch from Europe to Asia raised the prospect of greater demand for crude and oil products ahead of winter, while OPEC+ said it would restore only a relatively modest amount of supply to the market in November as planned. Saudi Aramco said the gas crisis has already boosted consumption.
Global oil prices have jumped more than 50% this year, adding to inflationary pressure that could slow recovery from the COVID-19 pandemic and impact consumer demand. Natural gas and coal prices have also climbed.
The Organization of the Petroleum Exporting Countries and allies (OPEC+) said on Monday it would stick to its pact for a gradual increase in oil output, sending crude prices to multi-year highs.
OPEC+’s decision raise to oil output modestly and gradually, despite this year’s surge in prices, was partly driven by concern that demand and prices could weaken, sources close to the group told Reuters