By Arathy Somasekhar
HOUSTON (RockedBuzz via Reuters) – Oil was at a year-to-date low on volatile trading after US government data showed an unexpected rise in fuel inventories, fueling demand fears in a market already spooked by an uncertain economy.
Brent futures for February delivery fell $1.62 to $77.73 a barrel, a loss of 2%, by 11:14 am EST (1614 GMT). U.S. crude fell $1.80, or 2.4%, to $72.45 a barrel. During the session, Brent oil hit its lowest since January 3.
U.S. distillate inventories increased by 6.2 million barrels, according to the Energy Information Administration, far exceeding estimates for a 2.2 million barrel increase. Gasoline inventories climbed 5.3 million barrels against expectations for a 2.7 million barrel increase.
The fuel inventory build exceeded a drawdown of 5.2 million barrels of crude inventories. The American Petroleum Institute had reported a crude inventory draw of about 6.4 million barrels, according to market sources. [API/S][EIA/S]
Providing some price support, China announced the most sweeping changes to its anti-COVID regime since the start of the pandemic, as RIA quoted Russia’s deputy foreign minister as saying Russia was concerned about a buildup of oil tankers in the Strait. Bosphorus.
China’s crude oil imports in November rose 12% from a year earlier, to a 10-month high, data showed.
Brent futures have approached oversold territory, while WTI futures have approached. Brent fell below $80 on Tuesday for only the second time in 2022 and erased gains for the year, which had brought prices close to an all-time high of $147 in March after Russia invaded Ukraine.
Meanwhile, at least 20 tankers queuing off Turkey face further delays crossing Russia’s Black Sea ports to the Mediterranean as operators scramble to comply with new Turkish insurance rules added ahead of a G7 price cap on the Russian oil, industry sources said on Tuesday.
“If confidence in the continued supply of Russian oil played a role in the recent weakness, it was probably misplaced. Tankers experiencing delays in Turkish waters are a prime example,” said Tamas Varga of oil broker PVM.
Russia, the Vedomosti newspaper reported on Wednesday, is considering options including banning oil sales to some countries to counter the ceiling imposed by Western powers.
“There is still tons of uncertainty in the markets today,” said Claudio Galimberti, senior vice president of Rystad Energy, adding that crude oil production in Russia may not decline as much as previously forecast.
However, warnings from big US banks about a likely recession next year weighed on the bill.
The net specific fund’s long position is now at a six-year low with some major funds liquidated in recent days, said Dennis Kissler, senior vice president of trading at BOK Financial.
(Additional reporting by Rowena Edwards in London and Trixie Yap in Singapore, editing by Jason Neely, Louise Heavens, David Evans and David Gregorio)
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