Oil prices tumbled on Wednesday morning despite a 2.2. million-barrel build in crude oil inventories and confirmation from OPEC+ that it would maintain its production levels.
A significant build in gasoline inventories combined with demand concerns to push oil prices lower, with gasoline inventories now 1% above the five-year average for this time of year.
As of Wednesday morning, Brent crude oil had dropped below $88 while WTI was trading below $86, both continuing a weak start to the month.
Crude oil prices continued to move lower despite the Energy Information Administration report that inventories had shed 2.2 million barrels in the week to September 29.
This compared with a draw of the same size estimated for the previous week by the EIA.
A day earlier, the American Petroleum Institute reported an estimated inventory decline of 4.2 million barrels for the last week of September.
In fuels, meanwhile, the EIA reported mixed inventory changes, but it was a build in gasoline and fears of weakening gasoline demand that traders paid attention to.
Gasoline inventories added a substantial 6.5 million barrels for the week to September 29, which compared with a build of 1 million barrels for the previous week. Gasoline inventories are now 1% above the five-year average for this time of year. Gasoline prices fell alongside oil prices on Wednesday morning, trading at $2.238.
Gasoline production averaged 8.8 million barrels daily last week, which compared with 9.1 million barrels daily for the prior week.
Middle distillates fell by 1.3 million barrels in the week to September 29, which compared with a moderate build of 400,000 barrels for the previous week.
Middle distillate production last week averaged 4.7 million barrels daily, which compared with 4.9 million bpd for the previous week.
Oil prices were already under pressure from a more expensive greenback combined with a pessimistic outlook for the global economy to pressure benchmarks.
A tight market combined with the OPEC+ decision to maintain its production cuts failed to counter bearish sentiment. The downward pressure on prices, which began last week with profit-taking from institutional investors, appears to have built some serious momentum.
Brent oil has now fallen below $88 and WTI is down below $86, marking a dramatic shift in sentiment from when traders were calling for triple-digit oil prices last week.
Oilprice.com