Oil Slips from One-Month High

Oil prices fell on Thursday, falling from their highest levels in more than a month, as U.S. fuel inventories increased amid declining demand.

Brent crude futures fell 63 cents, or 0.8 percent, to $80.17 per barrel. West Texas Intermediate (WTI) crude futures in the United States fell 58 cents, or 0.8 percent, to $77.27 per barrel.

Crude oil stockpiles in the United States fell last week. At the same time, gasoline inventories increased by more than 10 million barrels. This was the most significant weekly increase since April 2020, as supplies backed up at refineries due to lower fuel demand.

Implied product demand – particularly for gasoline – fell. This indicated that the public was wary of traveling after an increase in Omicron variant cases. On Monday, the United States reported nearly 1 million COVID-19 cases. It set a global record as the Omicron variant’s spread showed no signs of abating. Moreover, heavy snow also hampered traffic.

Furthermore, minutes from a Federal Reserve meeting in the United States revealed that policymakers might raise interest rates sooner than expected. This put pressure on riskier assets such as oil.

OPEC+

Brent and WTI futures rose to their highest levels since late November on Wednesday, as OPEC+’s decision to increase supplies eased concerns about a large surplus in the first quarter.

OPEC+, a group comprised of members of the Organization of Petroleum Exporting Countries, Russia, and other producers, agreed to increase supply by 400,000 barrels per day (BPD) in February. Brent prices expect to average $88 per barrel in 2022, up from $70 last year.

Meanwhile, the company said that TC Energy’s 590,000-BPD Keystone oil pipeline resumed operations on Wednesday after a one-day shutdown due to frigid winter weather in parts of western Canada.