Oil prices fell on Wednesday, weighed down by the surprise rise in stocks in the United States, with investors’ attention once again focused on supply and demand dynamics after the worsening of tensions between Ukraine and Russia. A barrel of Brent from the North Sea for delivery in January dropped 0.68% to $72.81. Its American equivalent, a barrel of West Texas Intermediate (WTI) for delivery in December, which was the last day of trading, lost 0.75% to $68.87.
“The weekly report on US inventories is mixed: the accumulation of crude oil (…) and the precipitous fall in gasoline demand” were bearish elements for the market, observed to AFP John Kilduff, of Again Capital According to data published Wednesday by the American Energy Information Agency (EIA), commercial crude reserves have increased by 500,000 barrels last week, with analysts expecting a slight decline of 85,000 barrels. This increase in stocks is linked both to the slowdown in refineries and to an acceleration in imports.
Decrease in volumes of gasoline delivered
The week also saw a decline in the volumes of refined products delivered to the market, particularly gasoline (-10%). “The market has regained some calm after the geopolitical upheavals of recent days, with the situation in Russia and Ukraine”argued Mr. Kilduff. Russia promised on Tuesday an “appropriate” response to the attack on its territory carried out by Ukraine with American ATACMS missiles, believing that the conflict was tipping into “a new phase” and announcing that the possibilities of resorting to nuclear weapons were thus broadened. Russia is the world’s second largest producer of black gold, and oil market players are raising the risk of an attack on Russian energy infrastructure with significant repercussions on prices.
According to Mr. Kilduff, operators are once again focusing on supply and demand issues by 2025, “with headwinds continuing to blow through this market in terms of oversupply next year.” Fears relating to the “weak (demand) in China” also contribute to the drop in prices, added the analyst. Furthermore, emissaries from developed countries met this week at the OECD to discuss stopping public financial support for fossil industries, but without yet reaching an agreement, a few weeks before Donald’s arrival. Trump at the White House in January, a source at the OECD told AFP.
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