By Laila Kearney NEW YORK (Reuters) -Oil prices fell by more than $5 on Thursday on higher U.S. gasoline stockpiles and after an ECB rate hike stoked demand worries, while returning oil supply from Libya and the resumption of Russia’s gas flows to Europe eased supply concerns. Brent crude futures lost $3.10, or 2.9%, to […]
Oil slumps as stockpiles and rate hikes stoke demand fears
By Laila Kearney
NEW YORK (Reuters) -Oil prices fell by more than $5 on Thursday on higher U.S. gasoline stockpiles and after an ECB rate hike stoked demand worries, while returning oil supply from Libya and the resumption of Russia’s gas flows to Europe eased supply concerns.
Brent crude futures lost $3.10, or 2.9%, to $103.82 a barrel by 11:43 a.m. EDT (1443 GMT). U.S. West Texas Intermediate crude futures were down $3.66, or 3.7%, at $96.22 after a 1.9% drop.
Both were down more than $5 earlier in the session.
Oil futures trading volumes have been thin and prices volatile as traders attempt to square weaker energy demand with tighter supply resulting from the loss of Russian barrels after the country’s invasion of Ukraine.
Flows through Russia’s Nord Stream 1 natural gas pipeline, which runs under the Baltic Sea to Germany, partially resumed after being shut for maintenance on July 11. The pipeline had already run on reduced volumes following a dispute sparked by Russia’s invasion of Ukraine.
“The resumption of Nord Stream gas flows appears to be conjuring up images of a more conciliatory posture on the part of Russia regarding continued movement of crude and products into Europe in the coming weeks/month,” said Jim Ritterbusch of Ritterbusch and Associates in a note. [nL1N2Z2080]
The European Central Bank on Thursday joined many other central banks in raising interest rates, focusing on fighting runaway inflation rather than the economic downturn, which can weigh on oil demand.
The Bank of Japan, meanwhile, maintained ultra-low interest rates to stimulate stalling economic growth.
U.S. gasoline inventories rose by 3.5 million barrels last week, government data showed on Wednesday, far exceeding analyst forecasts. [EIA/S]
“U.S. gasoline demand is struggling to shift into top gear during the peak summer driving season,” said PVM analyst Stephen Brennock.
Libya’s National Oil Corp (NOC) on Wednesday said that crude production had resumed at several oilfields after the lifting of force majeure on oil exports last week.
One of Canada’s major oil export arteries, the Keystone pipeline, was operating at reduced rates for a third day on Wednesday, operator TC Energy said.
(Additional Reporting by Shadia Nasralla and Rowen Edwards in London and Florence Tan in Singapore; Editing by Elaine Hardcastle)