# Oil falls from one-month high after U.S. fuel inventory surge
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-01-06
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Oil Prices Slide as U.S. Fuel Stockpiles Surge Amid
Meta Description: Oil prices fell over $1 as U.S. stockpiles surged and demand declined drastically, impacting global benchmarks Brent and WTI crude futures.
URL: https://financedigest.com/oil-falls-from-one-month-high-after-u-s-fuel-inventory-surgehtml

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By Florence Tan and Naveen Thukral

SINGAPORE (Reuters) -Oil prices lost ground on Thursday, falling more than $1 a barrel from their highest levels in more than a month after U.S. [fuel stockpiles surged amid declining demand](https://www.financedigest.com/oil-falls-on-concerns-economic-slowdown-may-dent-fuel-demand.html "Oil falls on concerns economic slowdown may dent fuel demand").

The [global benchmark Brent crude futures](https://www.financedigest.com/global-transcutaneous-monitors-market-current-and-future-demand-growth-opportunities-2029.html "Global Transcutaneous Monitors Market Current and Future Demand, Growth Opportunities 2029") fell $1.12, or 1.40%, to $79.68 a barrel, as of 0423 GMT. U.S. West Texas Intermediate (WTI) crude futures lost $1.04, or 1.3%, to $76.81 a barrel.

U.S. [crude oil](https://www.financedigest.com/oil-dips-after-fed-comments-us-crude-stock-build.html "Oil dips after Fed comments, US crude stock build") stockpiles fell last week while gasoline inventories surged more than 10 million barrels, the biggest weekly build since April 2020, as supplies backed up at refineries due to reduced fuel demand. \[EIA/S\]

Implied product demand – particularly for gasoline – slumped, suggesting that the public were cautious about travel in the wake of surging cases of the Omicron variant,” Caroline Bain, [chief commodities economist](https://www.financedigest.com/ecb-should-raise-rates-at-steady-pace-chief-economist-says.html "ECB should raise rates at steady pace, chief economist says") at Capital Economics said in a note.

These [fears are likely to persist for a few weeks](https://www.financedigest.com/rate-rise-fears-prompt-third-week-of-global-equity-funds-outflows.html "Rate rise fears prompt third week of global equity funds outflows") yet.

The United States reported nearly 1 million COVID-19 cases on Monday, setting a global [record as the spread of the Omicron variant showed no signs of slowing](https://www.financedigest.com/bp-makes-record-profit-in-2022-slows-shift-from-oil.html "BP makes record profit in 2022, slows shift from oil"), while heavy snow also disrupted traffic.

As well, minutes from a U.S. Federal [Reserve meeting that showed policymakers may raise rates more quickly than markets anticipated weighed on riskier assets such as oil](https://www.financedigest.com/oil-prices-dip-on-u-s-crude-reserve-release-inflation-pressure.html "Oil prices dip on U.S. crude reserve release, inflation pressure"). \[MKTS/GLOB\]

On Wednesday, Brent and WTI futures climbed to their highest since late November as a decision by OPEC+ to increase [supplies signalled easing](https://www.financedigest.com/uks-j-d-wetherspoon-returns-to-profit-as-supply-issues-ease.html "UK’s J D Wetherspoon returns to profit as supply issues ease") concern of a big surplus in the first quarter.

OPEC+, a group that includes members of the Organization of the Petroleum Exporting Countries, Russia and other producers, agreed on Tuesday to add another 400,000 barrels per day (bpd) of supply in February, as it has done each [month since August](https://www.financedigest.com/august-the-most-popular-month-to-start-a-holiday-home-search-reveals-portal.html "AUGUST THE MOST POPULAR MONTH TO START A HOLIDAY HOME SEARCH REVEALS PORTAL").

Our reference case now assumes the alliance will fully phase out the remaining 2.96 million bpd of [oil production](https://www.financedigest.com/best-paying-jobs-in-oil-and-gas-production.html "Best Paying Jobs in Oil And Gas Production") cuts by September 2022,” JP Morgan analysts said in a note.

With signs of demand withstanding the Omicron variant, low stocks and increasing market vulnerability to supply disruptions, we [see the need for more OPEC+ barrels,” the bank](https://www.financedigest.com/europes-banks-brace-for-russia-fallout-while-u-s-banks-see-limited-pain.html "Europe’s banks brace for Russia fallout while U.S. banks see limited pain") said. JP Morgan [forecast Brent prices to average](https://www.financedigest.com/fine-chemicals-market-is-estimated-to-witness-an-average-pace-with-a-cagr-of-5-4-during-the-forecast-period-2022-2032.html "Fine Chemicals Market is estimated to witness an average pace with a CAGR of 5.4% during the forecast period 2022-2032") at $88 a barrel in 2022, up from $70 last year.

Meanwhile, TC Energy’s 590,000-bpd [Keystone oil pipeline](https://www.financedigest.com/keystone-oil-pipeline-restart-timetable-unclear-traders-worry-about-supply.html "Keystone oil pipeline restart timetable unclear; traders worry about supply") was shut on Tuesday evening for unplanned maintenance, the company said on Wednesday, as parts of western Canada grappled with frigid winter weather.

(Reporting by Florence Tan and Naveen Thukral; Editing by Tom Hogue)


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