The oil market experienced significant pressure yesterday, with US crude oil inventories rising sharply, according to experts from ING, Ewa Manthey and Warren Patterson. The American Petroleum Institute (API) reported an increase of 6.5 million barrels in US crude oil inventories over the past week, exacerbating bearish sentiment in the market. This increase in stock levels comes as broader market trends signal a risk-off attitude among investors.
While ICE Brent crude oil prices settled 0.69% lower, oil managed to perform relatively better than other assets. Early morning trading today saw continued downward pressure on prices following the API’s release. The report also indicated a 400,000-barrel increase in crude stocks at Cushing, a key storage hub for oil in the United States.
In contrast, changes in refined product inventories provided a glimmer of support. Gasoline stocks fell by 5.7 million barrels, and distillate stocks dropped by 2.5 million barrels. While these figures are bearish for crude oil, they are seen as supportive for refined product prices.
Recent developments involving Ukraine have added complexity to the market dynamics. Reports emerged that Ukrainian forces struck Lukoil’s Norsi refinery in Russia, which has a capacity of approximately 340,000 barrels per day. This incident has provided additional support to the middle distillates market, particularly as ongoing sanctions and drone attacks on Russian refinery infrastructure contribute to a tighter supply scenario. The ICE gasoil crack spread has been trading around US$30 per barrel, signaling a robust market for refined products.
The current landscape of the oil market reflects a blend of bearish sentiment for crude oil and optimistic trends in refined products, driven by geopolitical factors and inventory adjustments.
Market participants are closely monitoring these developments, particularly as OPEC+ indicated a planned pause in supply increases through the first quarter of next year. This decision was announced during their recent meeting, where they confirmed an increase in oil supply by 137,000 barrels per day for December.
As the situation evolves, the oil market will remain sensitive to both inventory levels and geopolitical events, shaping price trends in the coming weeks. Investors are advised to stay informed on market reports and shifts that could impact the pricing landscape in the near future.