(Bloomberg) — Oil prices fell for a fourth day as premium traders taking geopolitical risks declined and U.S. inventories reached their highest level since June.
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Global benchmark Brent was trading below $87 a barrel after falling 3% on Wednesday. West Texas Intermediate was about $82. U.S. crude inventories rose by 2.7 million barrels last week, while fuel demand figures fell.
That added to signs of a market that has cooled after rallying earlier this month in anticipation of Iran’s attack on Israel last weekend. Right now, a premium of $5 to $10 a barrel is baked in on the tensions, but futures could fall without escalation, Goldman Sachs Group Inc. said.
“The EIA report yesterday was not bullish, added some declining geopolitical risk premiums and that explains some of the price decline,” said Giovanni Staunovo, commodities analyst at UBS Group AG.
Wednesday’s technical selling also likely hastened crude’s decline.
Oil prices remain comfortably higher year to date as supply cuts by OPEC+ members and geopolitical risks in the Middle East and Russia have boosted prices. The run-up had fueled speculation that crude could return to $100 a barrel, although the gain has now stalled, with some market figures, including the time spread and the size of the diesel market, pointing to slightly less tight conditions.
The American sanctions were also central. President Joe Biden’s administration has reimposed restrictions on Venezuelan oil, ending a six-month delay, a move that could hamper flows from the South American country. At the same time, new sanctions on Iranian oil were included as part of a foreign aid package released by Republicans in the House of Representatives and set to be voted on later this week.
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