Oil prices weaken due to surge in US inventory; worsening economic slowdown

14 Oct 2022 , 08:36 AM

Early Friday morning Asian trade saw a decline in oil prices as U.S. crude and gasoline stocks rose as Saudi Arabia and the United States continued to argue about OPEC+’s intentions to reduce production.

Brent crude prices had dropped 15 cents, or 0.2%, to $94.42 per barrel, while West Texas Intermediate (WTI) crude futures had fallen 21 cents, or 0.2%, to $88.90 per barrel.

Oil prices were impacted by a higher-than-anticipated increase in the amount of U.S. crude oil in storage as well as an increase in gasoline stockpiles. The U.S. Energy Information Administration reported that crude stocks increased by 9.9 million barrels in the week ending on October 7 to reach 439.1 million barrels, well-exceeding experts’ predictions in a Reuters poll for a 1.8 million-barrel increase.

In contrast to analysts’ expectations of a 1.8 million-barrel decline, gasoline stockpiles increased by 2 million barrels in the past week to 209.5 million barrels.

A sharp reduction in distillate stock levels, which coincided with an anticipated increase in demand for heating oil as winter approaches, restrained price declines.

Saudi Arabia and the US have been at odds over the Organization of Petroleum Exporting Countries and Allies’ (OPEC+) decision to lower its oil production target last week. The de facto leader of OPEC, Saudi Arabia, rejected Washington’s concerns as “not based on facts” and claimed that the U.S. request to postpone the cut by a month would have had unfavourable economic effects.

The Saudis allegedly exerted pressure on other OPEC members to vote against them, according to the White House, which claimed to have given the Saudis a study showing how the reductions could harm the world economy. Soon, officials from the two nations are anticipated to resume their conversations.

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