Continued Decline in Oil Prices

Continued Decline in Oil Prices: On Wednesday, oil prices moved to their lowest levels in four months today,
As markets absorbed the OPEC+ decision to increase supplies later this year, U.S. crude and fuel inventories increased.

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This decline came following news from OPEC and its allies about plans
to increase supplies from October despite recent signs of weak demand growth.
In the United States, crude oil and gasoline inventories rose last week,
according to figures from the American Petroleum Institute.

According to the New York Mercantile Exchange, crude oil futures for July traded at $73.25 per barrel.
The dollar index contracts, which measure the performance
of the U.S. dollar against a basket of other major currencies, rose by 0.08% to trade at 104.

At the same time, Brent oil prices for August rose by 0.03% to trade at $77.54 per barrel,
while the price difference between Brent oil and crude oil contracts is $4.29 per barrel.

Continued Decline in Oil Prices

OPEC+ may need to consider oil production capabilities next month

OPEC+ may need to consider oil production capabilities next month.

The UAE, Kazakhstan, and Iraq plan to increase their total capacity by more than
300,000 barrels per day by 2025.

 

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Supply Stability is a Challenge

 

 

 

 

 

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The key question to be posed at next month’s OPEC+ meeting is whether the alliance will continue to cut oil supplies in the second half of the year. However, it may also need to address the long-term issue of crude production capacities.

The Organization of Petroleum Exporting Countries and its allies are reviewing the amount of oil that members can pump. J.P. Morgan Chase & Co. believes that there are three main countries that deserve an upgrade in their supplies.

It was reported that the UAE, Kazakhstan, and Iraq intend to increase their total capacity by more than 300,000 barrels per day starting next year. Abu Dhabi has indicated a much larger increase, as the Abu Dhabi National Oil Company (ADNOC) announced this week an increase in its capacity by 200,000 barrels per day to 4.85 million barrels per day.

However, the planned expansions may pose risks to the cohesion of the alliance and to oil prices in general.

 

 

 

 

Supply Stability is a Challenge

Saudi Arabia, the leader of OPEC+, already has significant levels of surplus capacity,
and a slowdown in global oil demand growth is expected in 2025, according to Canive.
Achieving stability in global supplies, and thus supporting prices,
becomes an increasing challenge under these circumstances.

The report mentioned that “the main issue for OPEC lies in 2025,”
because even if the alliance maintains the supply restrictions as they are this year,
it “does not address the imbalances in 2025.”

It has proven to be a complex issue in the past for OPEC+ to accommodate the growth in member capacity. In 2021, the OPEC+ alliance nearly ended amid a dispute between the UAE and Saudi Arabia over Abu Dhabi’s expansion ambitions.
The issue came to the forefront again last year,
and eventually reaching a compromise led to Angola’s departure after decades of membership.”

 

 

Oil continues to fall despite geopolitical tensions

Oil continues to fall despite geopolitical tensions: Oil prices dropped after their first consecutive weekly decline this year,
as traders assessed potential next moves from Iran and Israel amid escalating tensions in the Middle East.

 

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The price of Brent crude fell to around $87 per barrel after losing 3.5% last week,
the largest decline since early February.
The United States imposed new sanctions on the Iranian oil sector
and approved new funding for Ukraine in its war against Russia.

Since the beginning of the year, oil has risen by about 13% due to geopolitical tensions and OPEC+ supply cuts,
which have reduced supplies in the market.
Investors will focus on a slew of US economic data this week, including the Federal Reserve’s preferred inflation gauge,
which will provide further clues on the course of monetary policy.

Since March 2021, fund managers have been the most optimistic about Brent crude,
buying oil contracts to benefit from any rise amid increasing geopolitical risks.
Other markets also indicate an upward trend, with call options—which profit when prices rise
—trading at a premium over put options.

Additionally, earnings from the world’s largest oil companies, including Total Energies, Exxon Mobil, and Chevron,
are due this week, along with Asian companies such as Reliance and Sinopec.

 

Oil continues to fall despite geopolitical tensions

Oil builds on a strong quarterly rise focusing on Chinese demand

Oil builds on a strong quarterly rise focusing on Chinese demand:
Oil prices stabilized after registering significant gains in the first quarter,
driven by hopes of a notable recovery in China and the associated increase in demand.

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Oil prices rose this year due to “OPEC+” cutting supplies to push prices up and offset
the increase in production from outside the group.
The alliance is expected to endorse its current production policy at its meeting held online on Wednesday.
Also contributing to price support were Ukrainian attacks
on Russian energy infrastructure and escalating tensions in the Middle East.

The price of Brent crude for June remained around $87 per barrel,
following a nearly 14% increase in the prices of the nearest-due
during the first three months of the year,
West Texas Intermediate crude exceeded $83.
March saw a recovery in the Chinese industrial sector, halting a five-month decline,
which increased optimism about improved consumption in the largest oil importer.

A note from Goldman Sachs stated that robust oil demand in Europe also helped boost prices,
noting weak US supply growth and the potential extension of “OPEC+.”
cuts until 2024 were also bullish factors.
Last month, the bank predicted that commodities would rise this year as central banks cut interest rates,
supporting industrial and consumer demand.

Trading volumes are expected to be low at the start of the week, as many economies,
including the United Kingdom, are on the Easter holiday.

Oil builds on a strong quarterly rise, focusing on Chinese demand.

Continued Rise in Gold Prices

Continued Rise in Gold Prices: Gold prices remained near a two-month high during Monday’s trading,
following the release of economic data related to the US economy last week.
This strengthens the likelihood of the Federal Reserve cutting interest rates in June.

 

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Continued Rise in Gold Prices

OPEC+ Decisions to Extend Production Cuts Lead Oil Higher

Yen Hovers Around 150.00 Levels Awaiting Bank of Japan Governor’s Speech

Continued Rise in Gold Prices

Gold prices remained near a two-month high during Monday’s trading,
following the release of economic data related to the US economy last week.
This strengthens the likelihood of the Federal Reserve cutting interest rates in June.

The main factors affecting gold prices are developments in interest rates.
Prices moved upwards on Friday due to a series of overall economic data released in the United States,
encouraging the Fed to cut interest rates sooner than expected.

Gold prices rose by about $50 during the past week,
as price pressures eased according to the preferred inflation index
of the Federal Reserve and the US consumer confidence index.

 

OPEC+ Decisions to Extend Production Cuts Lead Oil Higher:

Oil prices witnessed an increase on Monday following OPEC+ member country’s
agreement to extend voluntary production cuts by 2.2 million barrels per day
during the second quarter of the year. This decision is in line with market expectations.

Brent crude futures rose by 28 cents or 0.3% to $83.83 per barrel,
while West Texas Intermediate crude futures rose by 20 cents or 0.3% to $80.17 per barrel.

These production cuts are expected to provide support to the oil
market amidst global economic concerns and increased production outside the OPEC+ group.
Russia’s announcement of additional export and production cuts surprised some analysts.

Oil prices received support in 2024 from escalating geopolitical tensions,
with increased Houthi attacks on commercial vessels in the Red Sea.
However, concerns about economic growth continue to cast shadows over the market.

 

 

 

Yen Hovers Around 150.00 Levels Awaiting Bank of Japan Governor’s Speech

 

The Japanese yen declined in Asian markets on Monday against a basket of global currencies,
continuing its losses for the second consecutive day against the US dollar
and moving away from its highest level in two weeks, amidst ongoing correction and profit-taking.

The yen is trading around a crucial level of 150 yen to the dollar,
with markets awaiting an important speech by Bank of Japan Governor Kazuo Ouda
on inflation developments in the country and the future of negative interest rates.

The dollar rose against the yen by about 0.2% to 150.21 yen,
from the opening price at the start of the day at 149.96 yen, and recorded its lowest level at 149.84 yen.

The yen lost about 0.1% against the dollar at the end of trading on Friday,
amidst correction and profit-taking, after hitting its highest level in two weeks the previous day at 149.20 yen.

Last week, the Japanese yen rose by 0.3% against the US dollar,
marking its first weekly gain in the past five weeks,
and the largest weekly gain in 2024 since late December 2023.

This weekly increase is a result of strong statements by a member
of the Bank of Japan’s monetary policy committee,
in addition to the decline in the yield of US ten-year Treasury bonds.

 

Continued Rise in Gold Prices

The global oil demand

The global oil demand: Oil prices have clearly risen during recent trading sessions,
marking a monthly gain in January of 6.7% compared to December.
Here are the most significant events and factors that have impacted the markets.

 

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Forecasts by OPEC and the IEA for global demand

Saudi Aramco

Rise in US inventories

 

 

 

Forecasts by OPEC and the IEA for global demand

They still expect global demand to increase by 2.2 million barrels per day,
reaching a total expected demand of 104 million barrels in 2024.
This figure is considered a record, based on their expectations for global economic growth of 2.7%,
up from last month’s forecast of 2.6%.
Demand from China, the world’s second-largest oil importer,
is also expected to rise, despite economic challenges and no signs of recovery yet.
They also pointed out that the US economy is strong,
and demand will increase starting from the second quarter of the current year.

 

Saudi Aramco

The CEO of Saudi Aramco stated that the expected demand for the current year
could reach 1.5 million barrels per day. As for the IEA,
it expects demand to be at 1.2 million barrels per day,
seeing the first quarter of the current year as a period of weak demand
and expecting a rise in demand in the coming period.
On the other hand, attacks on Russian refineries, tensions in the Middle East,
and disruptions in navigation in the Red Sea have increased concerns
about the impact on supplies and supported the rise in oil prices.

 

 

Rise in US Inventories

However, the increase in floating crude oil inventories by +8.3% is considered a negative factor for oil prices,
as inventories accumulate and affect the balance between supply and demand.
Traders are awaiting the US inventory report today, which will impact oil markets,
after rising by more than 5 million barrels last week, but the markets did not pay much attention.
Oil markets are expected to see volatility in the coming period,

but in general, factors supporting a significant rise in oil prices are more pronounced.
Current oil prices: West Texas Intermediate (WTI) crude oil prices reached $77.90 per barrel,
while Brent crude oil prices rose to $82.85 per barrel.

 

The global oil demand

OPEC Monthly Report

OPEC Monthly Report

A new monthly report from the Organization of the Petroleum Exporting Countries (OPEC) was released on Wednesday,
providing forecasts for global oil demand rates in 2024.
OPEC maintained its previous expectations unchanged, projecting global demand to reach 2.2 million barrels per day.
Additionally, its forecasts for 2025 were left at 1.8 million barrels per day.

 

 

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The most important expectations

 

 

 

 

 

 

The most important expectations

The report highlighted several key points, anticipating the Chinese economy to be a major driver of oil demand growth in the next 12 months,
attributed to the recovery in economic, manufacturing, and service sector activities in China.
It is also expected that the demand for all petroleum products in China will fully recover to pre-pandemic levels by 2025.

 

Forecasts indicate that global oil demand will reach 104.4 million barrels per day,
driven by strong demand for air travel, road transportation,
industrial construction, and agricultural activities in non-member countries of the Organization for Economic Cooperation and Development (OECD).
OPEC expects demand in that region to be around 2 million barrels per day in 2024 and 1.7 million barrels per day in 2025.

 

Oil demand in the OECD countries is expected to grow by 300 thousand barrels per day in 2024 and 100 thousand barrels per day in 2025.

OPEC maintained its global economic growth forecasts unchanged,
expecting global economic growth to be 2.6% in 2024 and 2.8% in 2025.
OPEC attributes these growth expectations to low inflation and anticipated interest rate cuts,
noting that geopolitical developments will not significantly impact global economic growth.

 

OPEC also anticipates an increase in momentum in global trade in 2024 and 2025,
despite potential challenges from geopolitical developments and international trade relations,
which may result in issues such as tariff imposition and difficulties in international shipping.

 

Regarding economic growth, OPEC expects Brazil, Russia, China, India, and the United States to achieve higher-than-expected growth.
However, it noted that elections in the United States and India could impact fiscal policies and, consequently, growth dynamics.

 

OPEC Monthly Report

 

Navigating Oil Price Fluctuations

Navigating Oil Price Fluctuations: China’s Impact and OPEC’s Optimism

In the ever-evolving landscape of global economics and energy markets,

the intricate dance between China’s economic data and OPEC’s optimistic

outlook plays a pivotal role in shaping oil prices and influencing investment strategies.

This article delves into the dynamic relationship between these two factors,

shedding light on their impact and implications.

 

 

Table of contents

China’s Influence

OPEC’s Role

The Intriguing Interplay

The Glint of Gold

Conclusion

 

 

 

 

 

 

 

 

 

China’s Influence

Shaping Market Demand

China, often referred to as the world’s manufacturing hub, boasts a formidable presence as one of the largest oil importers globally. This position grants China substantial influence over market demand, a crucial factor contributing to oil price fluctuations on a global scale. The ebb and flow of China’s economic health send ripples across the oil market, as shifts in its manufacturing and consumption patterns can substantially impact prices.

China’s economic data serves as a powerful precursor to market sentiment. A surge in manufacturing output or a sudden slump in consumer spending can swiftly influence oil prices. As factories hum with activity or consumer spending surges, the demand for oil climbs, prompting an upward price trajectory. Conversely, economic downturns can have the opposite effect, leading to a dip in demand and consequently, a decline in oil prices.

 

 

OPEC’s Role

Balancing the Equilibrium

In the realm of oil production and distribution, the Organization of the Petroleum Exporting Countries (OPEC) wields significant clout. Its decisions regarding oil production quotas and supply levels hold the power to tilt the delicate equilibrium between supply and demand, thus exerting substantial influence over oil price trends.

OPEC’s optimistic or pessimistic outlook on the market can sway prices in either direction. When OPEC decides to increase production quotas, it floods the market with more oil, which can lead to a drop in prices due to oversupply. Conversely, a reduction in production quotas can tighten supply and potentially drive prices higher. The interplay between OPEC’s actions and China’s economic data creates an intricate web of market dynamics, often leading to moments of uncertainty.

 

 

The Intriguing Interplay

Several variables contribute to the multifaceted nature of oil price fluctuations. Geopolitical tensions, rapid technological advancements, and increasing climate considerations all weave into this intricate tapestry. The geopolitics of oil-producing nations, the development of cleaner energy alternatives, and the global push for sustainability are just a few factors that impact the delicate balance between supply and demand.

In recent times, the global energy landscape has witnessed seismic shifts. The emergence of renewable technologies and the concerted push for cleaner energy sources are redefining the parameters of the oil market. As nations transition away from fossil fuels, the demand for oil undergoes transformation, triggering a cascade of market reactions. Investors keen on navigating this evolving terrain must pay heed to the changing winds of energy policies.

Economic indicators, akin to signposts, offer insights into the future direction of oil prices. When economic data suggests robust growth, it instills confidence in the market, leading to increased investments. Conversely, when economic indicators paint a gloomy picture, caution often takes the reins. This intricate interplay between data and market sentiment underscores the interconnectedness of economic health and oil prices.

 

Navigating Oil Price Fluctuations: China’s Impact and OPEC’s Optimism

 

 

 

 

 

 

 

 

 

The Glint of Gold

A Paralleled Perspective

The glittering world of gold provides an intriguing parallel to the realm of oil.

Despite economic fluctuations, the price of gold often remains resilient.

This phenomenon underscores the deep-seated connection between economic uncertainty and precious metals.

In times of market volatility, both gold and oil emerge as sought-after assets, offering stability in turbulent waters.

Gold and oil, while disparate in nature, share common ground as hedges against uncertainty.

Investors seeking refuge from market turbulence often turn to these commodities as safe havens.

This parallel underscores the intricate dance between market dynamics and investor behavior, where the allure of stability guides investment decisions.

Understanding the intricate dynamics of oil price fluctuations is paramount for investors seeking to fortify their portfolios. In a world characterized by volatility, the ability to navigate the unpredictable terrain of oil markets enhances portfolio diversification and risk management.

Effective management of oil market volatility demands a blend of foresight and adaptability. Investors must delve into the nuances of China’s economic trajectory and closely monitor OPEC’s actions. Furthermore, a keen eye on the transitions unfolding in the energy sector provides a valuable compass for gauging future oil price trends.

 

 

 

Conclusion

A Symphony of Influence

The symphony of influence orchestrated by China’s economic data and OPEC’s optimism continues to reverberate throughout the global oil market.

The delicate interplay between these two titans shapes oil prices, carving out a path for investment choices. As we stand at the crossroads of economic shifts and energy transitions, the ability to decipher the harmonious cadence of these influences holds the key to informed investment decisions.

 

FAQs

 

How does China’s economic data impact oil prices?

China’s economic data, reflecting shifts in manufacturing and consumption, directly affects oil demand, thus influencing global oil prices.

 

What role does OPEC play in oil price fluctuations?

OPEC’s decisions on oil production quotas create supply-demand imbalances, which ripple through the market, impacting oil price trends.

 

What factors contribute to oil price uncertainty?

Geopolitical tensions, technological advancements, climate considerations, and energy transitions collectively contribute to the volatility of oil prices.

 

Why is gold often considered a hedge against economic uncertainty?

Gold’s value remains relatively stable during economic fluctuations, making it a sought-after asset for investors seeking stability.

 

How can investors effectively navigate oil market volatility?

Investors can navigate volatility by analyzing China’s economic trajectory, monitoring OPEC’s actions, and staying attuned to energy sector transitions.

 

Navigating Oil Price Fluctuations: China’s Impact and OPEC’s Optimism

Oil Prices Continue to Slip as Global Recession Fears Intensify

Oil Prices Continue to Slip as Global Recession Fears Intensify

The global economy has been feeling the effects of a potential recession, and it’s showing in oil prices.

For the third day in a row, oil prices have been slipping due to fears of an impending economic downturn.

 

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Slowing Economic Activity on Oil
Oil Production Cut as Fear of Oversupply Mounts
The Impact of Demand and Supply Chain

 

 

 

 

 

Slowing Economic Activity on Oil

 

The International Energy Agency (IEA) recently downgraded its forecast for global demand growth from 1.4 million barrels
per day to 1 million barrels per day due to slowing economic activity around the world. 

 

This downward revision is further evidence that there may be trouble ahead for economies worldwide
if current trends continue unabated. 

Oil markets are particularly sensitive to changes in consumer behavior and sentiment
as they are highly dependent on people’s willingness

and the ability to purchase gasoline or other petroleum products such as jet fuel or diesel fuel at any given period.

 

As concern about an upcoming recession grows, so too does uncertainty
about how consumers will respond
by cutting back on their spending habits
which could result in lower demand for petroleum-based products leading up to 2020. 

 

In addition, recent geopolitical tensions between Iran and Saudi Arabia
have also contributed significantly towards
falling oil prices over these past few days. 

The US government’s decision not only imposes sanctions against Iran
but also to increase tariffs on Chinese imports has created additional volatility within the market,
with investors wary of taking risks when it comes to investing in crude futures contracts. 

 

If you’re looking at ways you can protect yourself from this volatile market environment,
then consider diversifying your investments across different asset classes
including stocks bonds real estate etc – doing so will help reduce your risk exposure
while still allowing you to capitalize off any upside opportunities should conditions improve unexpectedly going forward? 

 

All things considered; these latest developments suggest that
we may see more downside pressure placed upon crude markets before long –
something which all investors need to take note of before making decisions
based solely upon short-term price movements alone.

 

 

Oil Production Cut as Fear of Oversupply Mounts

 

 

Oil prices have been on a downward slide for the third consecutive day, as fears of a global recession continue to mount.

Prices for Brent crude, the international benchmark, fell 2.4 percent to $60.80 a barrel,
while U.S. West Texas Intermediate crude fell 2.7 percent to $57.30 a barrel. 

 

This decline follows a trend of declining demand and investor sentiment,
as trade disputes and geopolitical tensions
have weighed heavily on the market.

 

Analysts attribute the decline to a lack of demand from major economies,
which could lead to an oversupply of oil and an even further decrease in prices. 

Oil companies and producers have responded to this market uncertainty by cutting production,
reducing spending, and laying off workers.

 

Major oil producers such as Saudi Arabia and Russia have both agreed
to reduce their production by 1.2 million barrels per day,
while other nations such as Nigeria, Iraq, and Venezuela have also pledged to trim their output. 

 

Some analysts are cautiously optimistic that these measures could help shore up prices,
but others believe that further cuts will be needed to restore balance to the market.

In the meantime, consumers worldwide can expect to pay more at the pump, as oil prices continue to slide.

 

 

 

 

 

 

The Impact of Demand and Supply Chain

 

The global economy has been facing a period of uncertainty due to a variety of factors
such as trade disputes, geopolitical tensions,
and a slowdown in China. 

 

Trade disputes have led to tariffs being imposed on multiple countries,
resulting in higher costs for businesses and potential job losses. 

Geopolitical tensions are also influencing global investments with investors becoming warier in certain markets. 

 

Lastly, China’s slowing economy is having an impact on other nations that rely heavily on Chinese exports. 

All of this is leading to an overall uncertain economic future until these issues get resolved.

 

 

The Impact of the European Union’s Oil

The Impact of the European Union’s Oil, The rise in oil prices is a result of industry data that showed U.S. crude stockpiles fell more sharply than expected last week.

 

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The Russian oil price cap
The EU’s Plan to Stabilize

 

 

 

 

 

The Russian oil price cap

 

With tensions running high between Iran and Saudi Arabia,
it remains to be seen how long this calm will last.
For now, though, it looks like oil prices are headed higher as traders bet on continued support from OPEC+.

Both benchmark contracts rose about 1% in the previous session as the United Arab Emirates, Kuwait, Iraq
and Algeria reinforced comments from Saudi Arabia’s energy minister that
the Organization of the Petroleum Exporting Countries (OPEC) and allies,
together called OPEC+, were not considering boosting oil output.
OPEC+ next meets to review output on Dec. 4.

The market had been jittery in recent days amid reports that some members of OPEC
were pushing for an increase in production due to fears that rising prices could hurt global economic growth.
However, it seems those concerns have been put to rest for now,
with Wednesday’s price action indicating that traders are confident
that OPEC will stick to its current production levels.

This highlights the supply tightness ahead of a looming
European Union bans and G7 price cap on Russian oil.

 

 

 

 

Brent crude futures gained 25 cents, or 0.3%, to $88.61 a barrel at 0101 GMT,
while US (WTI) crude futures rose 35 cents, or 0%.4%, to $81 .30 a barrel

The price cap on Russian oil is likely to see trade migrate to smaller businesses,
Vitol’s Chief Executive Officer Russell Hardy said at the FT Commodities Asia Summit.
The move would reduce market liquidity and increase costs for international oil companies (IOCs), he added.
Hardy’s comments come as Russia prepares to implement a new tax regime
which will see a ceiling placed on the export duties of crude oil and condensate from January 1, 2019.
The maximum duty will be set at $56 per tonne for crude and $48 per tonne for condensate.

 

 

The EU’s Plan to Stabilize

 

Quelling concerns that the cartel might increase output soon.
The European Union is confident that it will have its regulations in place
by December 5th, when a G7 plan to cap the price of Russian crude oil is set to go into effect.
This move would help stabilize global markets and protect consumers from sharp increases in fuel prices.
The EU has been working closely with Russia to ensure that this plan
can be implemented smoothly and without any disruptions.
Both sides are committed to ensuring that the transition is as seamless as possible.
This move will benefit both consumers and producers alike,
as it will help keep prices stable while still allowing for fair market competition.
It is yet another example of the EU working together with other countries to promote global economic stability.

Traders and investors are closely monitoring Russia’s exports considering recent tensions between the country and the West.
Many believe that if Russia were to trim its foreign sales in retaliation,
it could provide a boost to oil prices.
Inventories of U.S. crude fell by 4.8 million barrels last week,
according to data from the American Petroleum Institute,
which is seen as bullish for prices.
The EIA data showed that crude inventories fell by 1.6 million barrels
in the week to October 13, compared with analysts’ expectations for a 1.1-million-barrel drawdown.
On a bearish note, API data showed distillate stocks, which include heating oil and jet fuel,
rose by about 1.1 million barrels compared with analysts’ expectations for a drop of 600,000 barrels.
This is likely to weigh on oil prices in the near term as higher distillate stocks
could lead to lower demand for crude oil products.