Oil prices dropped for a second day on Thursday amid an industry report of increased U.S. crude inventories, the world’s largest consumer, a situation that heightened concern that global supply is surpassing current fuel demand.
Brent crude futures dropped 3 cents, or 0.03 percent, to $62.69 a barrel by 0234 GMT, after losing 3.8 percent in the last session. U.S. West Texas Intermediate crude fell 5 cents, or 0.09 percent, to $58.44 a barrel, extending its 4.2 percent decrease on Wednesday.
Market sources stating American Petroleum Institute figures on Wednesday added that U.S. crude stockpiles increased by 1.3 million barrels in the week ended November 7.
Sources reported, citing API data, that gasoline and distillate stockpiles fell to low levels.
Prices plummeted more than $2 a barrel on Wednesday after the Organization of the Petroleum Exporting Countries (OPEC) released its monthly report indicating that oil supply in the world will slightly surpass demand in the year 2026, a further variation from the previous forecasts of the group that the supply would be less than demand.
Analyst of Haitong Securities, Yang An, said that “OPEC’s signal of a supply surplus unleashed previously pent-up bearish sentiment in the previous session, while a U.S. crude inventory build added pressure, pushing oil prices to continue to slide on Thursday morning.”
OPEC predicts the excess supply next year due to the broader increases in production by OPEC+, a coalition of producers comprised of OPEC members and allies, including Russia.
However, the U.S. Energy Information Administration will publish its inventory figures later on Thursday.
According to a Reuters poll of nine analysts before the U.S. inventory data is released, analysts predicted an average of about 2 million barrels in crude inventories.
Meanwhile, other reports contributed to the bearish investor sentiment on Wednesday.
The EIA also reported in its Short-Term Energy Outlook that the U.S. oil production will establish a bigger record in the first place as compared to prior expectations this year.
EIA indicated that the world oil reserves will expand to 2026 due to rising production, which is outpacing the rise in oil fuel demand, which will strain oil prices further.
The market mood towards the bearish was also supported by a change in the market structure of WTI on Wednesday, as the spot price declined below the six-month futures delivery, and this is referred to as a contango.
A contango usually signifies that there is less immediate demand for oil or that there is a forecast of surplus supply in the future months.
Thus, the front-month WTI contract was discounted 18 cents to the six-month contract on Thursday.
