Oil prices fell sharply on Wednesday morning (October 28), with Brent hitting a two-week low after official data showed an unexpected spike in US crude inventories.
Brent crude fell $1.36, or 1.6%, to $83.22 a barrel, its lowest level in two weeks, down 2.1% in the previous session.
US crude oil (WTI) fell $1.28, or 1.6%, to $81.38 per pound, after falling 2.4% on Wednesday.
The U.S. Department of Energy said crude stockpiles rose by 4.3 million barrels last week, more than double the forecast for a 1.9 million-barrel build by analysts.
Citi Research commodities analysts said in a note that inventories increased as net imports of crude oil soared and refinery processing remained slow.
Gasoline stocks, however, fell 2 million barrels to their lowest level in nearly four years, as US consumers struggled with rising prices to replenish their gas tanks.
Meanwhile, storage tanks at the WTI crude delivery hub in Cushing, Oklahoma, have fallen more than at any time in the past three years, with long-term futures prices suggesting supply remains at multi-month low.
Prices rose in recent sessions on the prospect that countries like China and India would respond to coal and natural gas shortages by turning to crude-based products for power generation. and heating.
Louise Dickson, senior oil market analyst at Rystad Energy, said some countries are seeing a spike in COVID-19 cases in the fall, which presents downside risks to growth. oil demand in the near term and may create pressure on oil prices.
Liquefied natural gas prices in the US increased more than 5%
U.S. liquefied natural gas (LNG) prices rose more than 5% to a three-week high on Wednesday (October 27) on forecasts of colder weather and higher heating demand over the next two weeks compared to the previous two weeks. before.
That price increase comes despite rising US output and a 5% drop in gas prices in Europe after Russian President Vladimir Putin informed energy giant Gazprom GAZP.MM it would start pumping gas in. Europe’s gas storage after Russia completes filling its stockpile.
LNG prices around the world have surged to record highs in the past few months as utilities ramp up LNG additions to fill low-level inventories in Europe and meet rising demand in Europe. Asia, where energy shortages have caused power outages in China.
Analysts forecast US gas inventories to reach 3.6 trillion cubic feet (tcf) at the start of the heating season in November.
US stocks are now about 4% below the five-year (2016-2020) average for this time of year. In Europe, analysts say inventories are about 15 percent lower than usual.
The November LNG contract for delivery rose 32.0 cents, or 5.4%, to $6,202/mmBtu. That was the highest close for the contract since October 5.
Contracts for December delivery rose 20 US cents to $6.20/mmBtu.
Data provider Refinitiv said production in the US 48 states has averaged 92.3 billion cubic feet per day (bcfd) so far in October, up from 91.1 bcfd in September.
Refinitiv forecasts average US gas demand, including exports, to rise from 90.7 bcfd this week to 92.7 bcfd next week.
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