Oil dips on oversupply sentiment but sanctions limit decline
Oil prices fell on Wednesday as an industry report showed higher crude inventories in the United States, the world’s biggest crude consumer, reinforcing concerns of oversupply, though price declines were limited by sanctions on Russian oil.
Brent crude futures eased 22 cents, or 0.3%, to $64.67 a barrel by 0730 GMT, after gaining 1.1% in the previous session.
U.S. West Texas Intermediate crude futures were down 17 cents, or 0.3%, at $60.57 a barrel, after rising 1.4% on Tuesday.
U.S. crude and fuel stocks rose last week, market sources said late on Tuesday, citing American Petroleum Institute figures.
Crude stocks rose by 4.45 million barrels in the week ended November 14, while gasoline inventories climbed by 1.55 million barrels and distillate inventories increased by 577,000 barrels, the API reported, according to the sources.
"Overall, the report was relatively bearish," said ING commodities strategists, though they cautioned, "Market participants appear more concerned about supply risks than the odds of a surplus going forward."
U.S. sanctions on major Russian producers Rosneft and Lukoil set a November 21 deadline for companies to unwind their dealings with the Russian firms.
On Monday the U.S. Treasury said the sanctions, already squeezing Russia’s oil revenue, are expected to curb its export volumes. Crude buyers in China and India have already started switching to alternative suppliers.
"Benchmark prices are rangebound, with the market eyeing the (November 21) sanctions’ impact, though there are downward pressures in the background with oversupply sentiment," said Emril Jamil, a senior oil analyst at LSEG.
Prices gained on Tuesday as investors considered the impact of the U.S. sanctions and Ukrainian attacks on Russian refineries and export terminals increased concerns of crude and fuel disruptions.
The worries about Russian supply are being weighed against analysts’ forecasts that oil output is in excess of current demand, which has pressured prices.
After Ukrainian attacks on Russian energy and port infrastructure, profit margins on diesel fuel surged in Europe, reaching their highest on Tuesday since September 2023, amid an increase in refinery margins globally.
Source: Reuters.com
