Crude plunges 4% after surprise rise in US inventories

Oil fell sharply on Wednesday after an unexpected increase in crude and gasoline inventories in the US erased initial gains following a “tight” production increase announced by OPEC+ for September.

OPEC and its allies (OPEC+) agreed to raise production by just 100,000 barrels a day in September, slowing the pace of output growth they had previously implemented amid growing concerns that global monetary policy tightening will slow the development. It is noted that in July and August, the cartel had committed to adding more than 600,000 barrels per day to the market.

The OPEC+ decision reversed the mood in the oil market, sending crude contracts into positive territory, but this did not last long as the picture changed again after the announcement of oil and gasoline inventories in the US.

In particular, as the US Energy Information Administration (EIA) informed, the country’s crude oil inventories increased by 4.5 million barrels in the week to July 29, when analysts in a Reuters survey expected a drop of around 600,000 barrels. .

Among other things, crude inventories at the Cushing, Oklahoma, delivery hub for US futures contracts rose by 926,000 barrels a week, according to the EIA.

At the same time, US gasoline inventories rose by about 200,000 barrels in the week to 225.3 million barrels, while analysts had widely expected a sharp decline of 1.6 million barrels.​​

This unexpected rise in US stocks wiped out any gains recorded up to that point in crude oil futures, which ended the day with heavy losses.

Specifically, the September West Texas Intermediate crude contract plunged $3.76, or 4%, to settle at $90.66 a barrel.

Accordingly, Brent crude fell $3.76, or 3.7, to end the day at $96.78 a barrel.