Oil Prices Fall Over 1% Amid Stronger Dollar and Rising U.S. Fuel Inventories
Oil prices dropped over 1% on Wednesday, pressured by a stronger dollar and a significant increase in U.S. fuel inventories, despite earlier gains supported by tightening supplies from OPEC members and Russia.
Price Decline Details:
- Brent crude: Fell 89 cents (1.16%) to settle at $76.23 a barrel.
- West Texas Intermediate (WTI): Dropped 93 cents (1.25%) to $73.32 a barrel.
Both benchmarks had risen by over 1% earlier in the session before reversing gains.
Read More: International Oil Prices Hit 2.5-Month Low
Key Factors Behind the Drop:
- Rising Fuel Inventories:
- Gasoline stocks surged by 6.3 million barrels last week to 237.7 million barrels, far exceeding the expected 1.5 million-barrel rise.
- Distillate stockpiles increased by 6.1 million barrels to 128.9 million barrels, compared to a forecasted rise of 600,000 barrels.
- The builds were driven by refiners ramping up production, according to Andrew Lipow, president of Lipow Oil Associates.
- Crude Stock Changes:
- U.S. crude inventories fell by 959,000 barrels to 414.6 million barrels, slightly exceeding the expected draw of 184,000 barrels.
- Stronger Dollar:
- A stronger dollar made oil more expensive for holders of other currencies, adding downward pressure on prices.
Offsetting Factors:
- Tightening Supplies:
- OPEC oil output fell in December due to field maintenance in the UAE, offsetting gains from Nigeria and other members.
- Russian oil output in December averaged 8.971 million barrels per day, below the country’s target, according to Bloomberg.
Market Outlook:
Analysts predict oil prices may decline in the coming years due to increasing production from non-OPEC countries.
- BMI, a division of Fitch Group, forecasts Brent crude to average $76 per barrel in 2025, down from $80 per barrel in 2024.
Despite recent declines, oil market dynamics remain influenced by fluctuations in inventories, currency exchange rates, and production adjustments from key global producers.
