Oil falls as investors make profits after building US inventories

Author: Yuka Obayashi

TOKYO (Reuters) – Oil prices fell on Friday from a seven-year high this week as investors made gains and increased fuel inventories, although overall sentiment remained strong due to tight supply and geopolitical concerns.

futures fell $ 1.00 or 1.1% a barrel to $ 87.38 a barrel for $ 0747 GMT. The contract fell 3% earlier, the most since December 20. A day earlier, the global benchmark hit $ 89.50 a barrel, the highest since October 2014.

US West Texas Intermediate (WTI) gross futures fell $ 1.16, or 1.4%, to $ 84.39 a barrel. The contract had previously fallen by 3.2%, the most since December 20, after rising to its highest level on Wednesday, October 2014.

The last crude price rally seems to have been on Thursday when Brent and WTI ended the trading session with minor losses, but both benchmarks gained more than 10% this year and their fifth consecutive week of gains.

“The unexpected rise in U.S. crude stockpiles has pushed investors to profit,” said Tatsufumi Okoshi, senior economist at Nomura Securities, adding that the recent rally was excessive.

“However, the losses were limited, as demand and the tightening of demand between Russia and Ukraine and supply constraints in the Middle East would continue, and they were carefully maintained to sell investors in the Middle East,” he said.

In the U.S., the world’s largest oil consumer, gasoline inventories rose 5.9 million barrels since February 2021, according to the U.S. Energy Information Administration (EIA).

Crude storage rose 515,000 barrels last week, contrary to industry forecasts.

The EIA also reported a slight decline in refinery rides, indicating lower crude demand.

“The fall in the stock market has also been affected by concerns that the Federal Reserve may have an aggressive way to raise rates this year,” Chiyoki Chen, chief analyst at Sunward Trading, said.

Concerns over oil supplies have escalated this week after the Youthi Houthi group attacked the United Arab Emirates, the third largest producer in OPEC, and Russia, the world’s second-largest oil producer, has deployed large troops near the Ukrainian border, raising fears of an invasion. .

However, the International Energy Agency (IEA) said on Wednesday that oil supplies would soon exceed demand as some producers were pumping at or above all-time highs, while demand remained steady despite the spread of the Omicron coronavirus variant.