SINGAPORE- Oil prices fell on Wednesday as industry data pointed to a big build in crude oil and distillate stocks in the United States, the world’s largest oil consumer, and as pressure mounted on OPEC to increase supply.
Brent crude futures fell by 98 cents, or 1.2 percent, to $83.74 a barrel while US West Texas Intermediate (WTI) crude futures tumbled by $1.32, or 1.6 percent, to $82.59 a barrel.
“Crude oil lower as pressure mounted on OPEC to boost output. US President Biden led calls from major economies for the group to increase production beyond what has already been agreed,” analysts from ANZ said in a note on Wednesday.
President Joe Biden, speaking at a climate summit in Glasgow, blamed a surge in oil and gas prices on a refusal by OPEC nations to pump more crude.
US crude and distillate fuel stocks rose last week while gasoline declined, according to market sources citing American Petroleum Institute figures on Tuesday.
Crude stocks rose by 3.6 million barrels for the week ended Oct. 29. Gasoline inventories fell by 552,000 barrels and distillate stocks rose by 573,000 barrels, the data showed, according to the sources, who spoke on condition of anonymity.
Analysts polled by Reuters had expected crude oil inventories to have risen last week.
Data from the US Energy Information Administration, the statistical arm of the US Department of Energy, will be released later on Wednesday.
In a sign that high prices are encouraging more supply elsewhere, BP said on Tuesday it will ramp up investments in its onshore US shale oil and gas business to $1.5 billion in 2022 from $1 billion this year.
Meanwhile, China’s coastal province of Shandong is expected to shutter refineries with daily capacity of more than half a million barrels by the end of 2022 to make way for a new petrochemical complex, a provincial official and industry sources said.
The clean-up of 10 plants, accounting for about 3 percent of refining capacity in the world’s largest importer of crude, is part of efforts to streamline a bloated oil refining sector that brought fuel shortages in some regions recently.
Their closure, aimed at scrapping excess fuel output and curbing carbon emissions, will also dampen demand by removing 13 million tonnes of annual crude oil import quotas, or 260,000 bpd, from China’s quota list, sources estimated.
“This is a positive development to help Shandong’s shift to more advanced manufacturing capacity that also serves the national carbon goal,” said Zhou Mi, an analyst with consultancy JLC who is based in the eastern region. – Reuters
