Oil prices fell on Wednesday after a rise in weekly US crude inventories fed into bearish sentiment about the deepening global supply glut that has brought oil prices close to 12-year lows.
Brent crude, the global benchmark, was down 37 cents at $30.49 a barrel at 1538 GMT. US West Texas Intermediate crude (WTI) was down 30 cents at $30.13 a barrel. Both contracts saw intra-day highs of more than $1 above Tuesday’s closing price on upbeat Chinese economic data earlier in the session.
“Overall, it’s a bearish report. I think today’s inventory report is all about products…The long awaited massive decline in crude production is not starting again,” said Dominic Chirichella, senior partner at Energy Management Institute in New York.
US crude inventories rose by 234,000 barrels in the last week, compared with analysts’ expectations for an increase of 2.5 million barrels, according to the government’s Energy Information Administration.
Analysts at Morgan Stanley warned on Wednesday that a rise in demand for crude could be lower than previously expected.
“Any slowing in the rate of demand growth could delay the timing of rebalancing and ultimately a price recovery,” they said in a research note.
The potential for the calling of an emergency OPEC meeting also weakened on Wednesday when Iran’s oil minister was quoted as saying he had not received any request for such a gathering.
Nigeria’s oil minister said on Tuesday that a “couple” of OPEC members had asked for an emergency meeting.
US gasoline and diesel inventories surged for a second week while crude stocks rose slightly last week.
Gasoline stocks rose 8.4 million barrels in the week to Jan. 8, compared with analysts’ expectations in a Reuters poll for a 2.7 million-barrel gain. In the previous week, the stockpiles rose more than 10 million barrels, the largest build since 1993.
Distillate stockpiles, which include diesel and heating oil, rose 6.1 million barrels, versus expectations for a 2.0 million-barrel increase, the data showed. Gulf Coast distillate stocks rose to the highest level seasonally since 2011.
The data showing the builds sent futures for heating oil and gasoline blendstock down nearly 2 percent. US
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 97,000 barrels, EIA said.
More builds are expected ahead, said Tariq Zahir, managing member at Tyche Capital. “I think people have to start getting prepared for the builds that we’re going to see in the next four to six weeks,” he said.
As refineries shut for seasonal maintenance and more crude potentially comes online from Iran, inventories are likely to build, he said.
The pair of factors could inflate inventories and weigh further on prices, he said.
“Crude has had a slow death, but you haven’t had the capitulation yet.”
Refinery crude runs fell by 194,000 barrels per day, EIA data showed. Refinery utilization rates fell by 1.3 percentage points.
US crude imports rose last week by 678,000 bpd.