Oil Slides as Rising US Supplies Help Allay Geopolitical Worries
Oil retreated sharply as a report showing rising US stockpiles helped ease concerns over geopolitical risks sprawling from Iran to Russia and Venezuela.
Brent slid briefly below $63 a barrel, down the most in a week. The industry-funded American Petroleum Institute reported a 4.4 million barrel increase in US crude inventories, which would take oil stored in commercial tanks to the highest level in more than five months, if confirmed by official data later Wednesday.
The supply buildup may help cushion the impact of US sanctions against Russian producers Rosneft PJSC and Lukoil PJSC that are set to kick in within days, part of efforts to raise the pressure against Moscow to end the war in Ukraine. An Axios report that Washington has been working in consultation with the Kremlin to draft a new plan also eased supply concerns, though Moscow denied any talks.
Oil has lost ground this year — including a run of three monthly declines through October — on concern that worldwide supplies will top demand. The International Energy Agency has forecast a record glut next year, as supplies swell both inside and outside of the OPEC+ alliance.
Prices were also pressured after failure to break past their 50-day moving average in recent days. The global benchmark came within two cents of that marker on Tuesday, before retreating sharply on Wednesday.
Following the US government shutdown, investors are also due a slew of backlogged data. Later Wednesday, the Commodity Futures Trading Commission will resume publication of the Commitments of Traders breakdown of market positioning. As many as two will be released each week until Jan. 23, when the schedule returns to normal.
Source: Bloomberg.com
