Oil prices fell about 1% on Wednesday, reversing strong gains after data showed US crude stockpiles jumped unexpectedly in their largest build since April amid a record surge in imports.
US crude inventories rose by 15.2 million barrels to 503.2 million barrels last week, according to the Energy Information Administration (EIA), compared with analysts’ expectations in a Reuters’ poll for a 1.4-million-barrel drop.
Brent crude fell 21 cents, or 0.4%, to $48.63 a barrel by 1609 GMT. US West Texas Intermediate (WTI) crude CLc1 fell 39 cents, or 0.9%, to $45.21.
“I’m trying to get my jaw off the ground here...15 million barrels is an off-the-charts build,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
US net imports of crude oil rose by 2.7 million barrels per day (bpd) last week, the biggest increase on record, as exports plunged.
“It looks like the Saudis are targeting the US inventories situation again, sending barrels here,” said John Kilduff, partner at Again Capital LLC in New York.
US gasoline and distillate stockpiles were also markedly higher as refineries boosted output.
“The significant increase in gasoline and distillate inventories is likely a result of lower oil demand post the Thanksgiving holiday, as well as additional stay at home measures across country,” said Andrew Lipow, President of Lipow Oil Associates in Houston.
Earlier in the session, oil rose as news about Covid-19 vaccines lifted investor hopes for a recovery in fuel demand and the US dollar, in which oil is traded, reached 2-1/2-year lows.
Britain began mass vaccinations on Tuesday. Expectations that others will soon follow helped offset fears about a sharp rise in coronavirus cases globally that has led to new restrictions on movements around the world.
The vaccine news helped offset some fears from a sharp rise in coronavirus cases globally that has led to a string of renewed lockdowns, including strict measures in California, Germany and South Korea.
“The worsening Covid situation, in particular in Europe, is weighing on prices,” research firm JBC Energy said.
Published in The Express Tribune, December 10th, 2020.