Oil Falls With Profit-Taking After US Stockpiles Increase

Oil prices fell on Friday, January 21, after rising to a seven-year high this week, as an increase in US crude and fuel inventories prompted investors to cash in on the rally.

Gasoline stocks rose in the United States, the world’s largest oil consumer, by 5.9 million barrels, to the highest level since February 2021, according to the US Energy Information Administration, and crude stocks increased by 515,000 barrels last week, defying expectations in the sector.

The administration’s data also showed a limited decrease in crude consumption in refineries, which indicates a decline in demand.

The International Energy Agency said that oil supply is expected to exceed demand soon, as it is expected that some producers will pump crude at or above all-time highs, while demand is holding up despite the spread of the mutant Omicron from the Coronavirus.

Brent crude futures fell $2.46, or 2.8%, to $85.92 a barrel, and contracts had dropped 3% earlier, in the most significant decline since December 20.

The global benchmark touched $89.50 a barrel on Thursday, the highest level since October 2014.

US West Texas Intermediate crude futures fell $2.61, or 3.1%, to $82.94 a barrel. US crude contracts fell earlier by 3.2%, which is also the biggest decline since December 20, after rising to the highest level since October 2014 on Wednesday.

It seems that the recent increase in crude prices lost momentum on Thursday when Brent and US crude ended the trading session with modest losses. The benchmark has risen more than 10% since the beginning of the year amid fears of tight supplies.