Shafaq News/ Oil prices declined for a second day on Thursday afterlarge builds in fuel inventories in the U.S., the world's biggest oil user,though expectations for increasing winter fuel demand and concerns over tightersupply limited the drop.
Brent crude futures fell 8 cents to $76.08 a barrel by 0409 GMT. U.S.West Texas Intermediate crude futures dropped 11 cents to $73.21. Both priceswere down around 0.1% from the previous session.
Both benchmarks fell more than 1% on Wednesday as a stronger dollar andthe bigger-than-expected rise in U.S. fuel stockpiles weighed on prices.
Gasoline stocks rose by 6.3 million barrels last week to 237.7 millionbarrels, the U.S. Energy Information Administration said on Wednesday. Analystspolled by Reuters had expected a 1.5 million-barrel build.
Distillate stockpiles rose by 6.1 million barrels in the week to 128.9million barrels, versus expectations for a 600,000-barrel rise.
But crude inventories fell by 959,000 barrels in the week, compared withanalysts' expectations for a 184,000-barrel draw.
"Increased U.S. fuel inventories prompted some selling, but thedownside is limited due to the winter demand season in the northernhemisphere," said Hiroyuki Kikukawa, president of NS Trading, a unit ofNissan Securities.
JPMorgan analysts expect oil demand for January to expand by 1.4 millionbarrels per day year-on-year to 101.4 million bpd, primarily driven by"increased use of heating fuels in the Northern Hemisphere".
"Global oil demand is expected to remain strong throughout January,fueled by colder-than-normal winter conditions that are boosting heating fuelconsumption, as well as an earlier onset of travel activities in China for theLunar New Year holidays," the analysts said.
Despite the falling prices, the market structure in the Brent futures isindicating that traders are becoming more concerned about supply tightening atthe same time the demand is increasing.
The premium of the first-month Brent contract over the six-monthcontract reached its widest since August on Wednesday. A widening of thisbackwardation, when futures for prompt delivery are higher than for laterdelivery, typically indicates that supply is declining or demand is increasing.
Looking ahead, China's demand trends, the incoming U.S. administration'senergy and trade policies, and its stance on the Russia-Ukraine war will be keyfocuses, said Nissan Securities' Kikukawa, adding that traders were likely torefrain from taking large positions until President-elect Donald Trump takesoffice on Jan. 20.
(Reuters)