Oil falls when investors reap profits from US stockpiling

Oil and gas tanks were seen at an oil depot in a port in Zhuhai, China on October 22, 2018. REUTERS / Aly Song / File Photo

TOKYO, January 21 (Reuters) – Oil prices fell on Friday, after rising to seven-year highs this week, as investors took profits following a build-up in US crude oil and fuel stocks, although general sentiment remained solid due to concerns over tight. offers and geopolitics.

Brent oil futures were down $ 1.00, or 1.1%, to $ 87.38 a barrel by 0747 GMT. The contract previously fell by as much as 3%, mostly since December 20. A day earlier, the global benchmark index reached $ 89.50 a barrel, the highest since October 2014.

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

The recent rise in crude oil prices seemed to end on Thursday when Brent and WTI ended their trading session with small losses, but both benchmarks have risen more than 10% this year and are heading for a fifth consecutive weekly rise.

“An unexpected increase in US crude oil stocks caused investors to make a profit,” said Tatsufumi Okoshi, senior economist at Nomura Securities, adding that the recent rise has been exaggerated.

“Losses were still limited as expectations that supply tightness would continue amid recovering demand and geopolitical tensions between Russia and Ukraine and the Middle East kept investors cautious about selling,” he said.

Gasoline inventories in the United States, the world’s largest oil consumer, rose 5.9 million barrels to the highest level since February 2021, according to the US Energy Information Administration (EIA).

Crude oil inventories rose by 515,000 barrels last week, against industry expectations.

The EIA also reported a slight decline in refinery operations, indicating lower demand for crude oil.

“Falling stock markets due to concerns that the Federal Reserve may aggressively raise interest rates this year also weighed on sentiment,” said Chiyoki Chen, chief analyst at Sunward Trading.

Concerns over oil supplies rose this week after Yemen’s Houthi group attacked the United Arab Emirates, OPEC’s third-largest producer, while Russia, the world’s second-largest oil producer, has built up a large troop presence near Ukraine’s border, raising fears of an invasion. read more

However, the International Energy Agency (IEA) said on Wednesday that the oil supply will soon take over demand as some manufacturers are set to pump at or above all-time highs, while demand remains despite the spread of the Omicron coronavirus variant. read more

Reporting by Yuka Obayashi; editing by Kim Coghill and Jason Neely

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