Oil prices plummeted on Thursday, spreading losses after an unexpected increase in inventories in the United States was reported. This shift comes about after oil prices stabilized following a recent run of gains. Brent crude saw a drop of 11 cents at $78.53 a barrel, following a drop of 0.6% on Wednesday.
US oil saw a dip of 5 cents taking its price to $74.78 a barrel. The US oil price had also seen a decline of 0.6% in the previous session.
As reported by the US Energy Department’s Energy Information Administration (EIA) on Wednesday, last week saw a rise in oil and fuel stockpiles in the US.
Even though analysts had projected a 1.7-million-barrel drop, EIA data reported an increase of 4.6 million barrels in Crude inventories taking the figure up to 418.5 million.
But both contracts tilted into higher territory earlier in the session. Following two days of price dips, Brent surpassed $80 on Tuesday after nearly three years. It has led to oil bulls on a lookout for the next barrier to breach.
Analyst at StoneX Joseph Perry said, “$80 oil is not over-the-top high,”.
The surge in US inventories has come about as the production levels start returning to the levels they were at before Hurricane Ida hit nearly a month ago. Last week production output increased 11.1 million barrels per day.
Next week the Organization of the Petroleum Exporting Countries, Russia and other allies (OPEC+), are scheduled to meet. It is expected to keep the deal regarding the additional 400,000 barrels per day (bpd) added into its output for the month of November.
Analysts are of the opinion that the ongoing energy crisis and concerns regarding the property developer Evergrande in China have impacted market sentiment. China remains the world’s biggest crude importer and its second-largest consumer after the US hence, a hit on the world’s second-biggest economy is expected to impact oil demand as well.
