Crude oil fell for a second straight day after data showed U.S. crude inventories rose by the most since November, keeping benchmarks within a narrow range for the year.
Brent crude fell toward $81 a barrel after falling 1.4% on Wednesday, while West Texas Intermediate neared $76. Last week, U.S. stockpiles increased by a larger-than-expected 12 million barrels, and holdings in Cushing, Oklahoma, a hot oil storage hub, also increased. Still, diesel and gasoline inventories declined due to refinery shutdowns.
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“The market was shocked by the amount of increase in crude oil inventories,” said Han Zhong Liang, investment strategist at Standard Chartered. “We expect the oil market to remain roughly balanced in 2024,” he said, adding that prices are likely to remain around current levels for some time.
Despite tensions in the Middle East and efforts by OPEC+ to curb production, and strong supply from drilling companies outside the cartel, crude oil prices have been unable to break out of the $10/barrel range this year, and global demand growth is expected to slow through 2024. There are also concerns that the economy will slow down. The view that U.S. interest rates may remain high for an extended period of time as inflation continues is also a headwind.
Still, market indicators continue to suggest tight conditions, with the time spreads of both major benchmarks maintaining a bullish inverse structure despite a slight decline. Profits for refiners from producing fuels such as diesel and gasoline also remain high.
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The International Energy Agency, which India is also in talks to join, is scheduled to release its monthly outlook later on Thursday. IEA chief Fatih Birol said earlier this week that global markets should remain “comfortable” this year as supply increases and demand growth slows.
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