(Bloomberg) — Oil prices fell for a fourth day as the premium traders put on geopolitical risks subsided and US inventories reached their highest levels since June.
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Global benchmark Brent traded below $87 a barrel after slumping 3% on Wednesday. West Texas Intermediate was at about $82. US crude inventories rose by 2.7 million barrels last week, while gauges of fuel demand declined.
That added to signs of a market that has cooled after a rally earlier this month in anticipation of Iran’s attack on Israel last weekend. At present, there’s a premium of $5 to $10 a barrel baked in because of the tensions, but futures may fall without escalation, Goldman Sachs Group Inc. said.
“The EIA report was not bullish yesterday, add some fading geopolitical risk premium and that explains part of the price drop,” said Giovanni Staunovo, a commodity analyst at UBS Group AG.
Technical selling on Wednesday also likely hastened crude’s decline.
Oil remains comfortably higher year to date as supply cuts by OPEC+ members and geopolitical risks in the Middle East and Russia have combined to aid prices. The run-up had ignited speculation that crude may regain $100 a barrel, although the ascent has now faltered, with some market metrics including timespreads and pockets of the diesel market pointing to slightly less tight conditions.
US sanctions were also in focus. President Joe Biden’s administration has reimposed restrictions on Venezuelan oil, ending a six-month reprieve in a move that may hamper flows from the South American nation. At the same time, new sanctions on Iranian oil were included as part of a foreign aid package released by House Republicans that is slated for a floor vote later this week.
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