Prices of Brent crude and West Texas Intermediate were down nearly 4% on Wednesday as an unexpected and significant increase in U.S. gasoline inventories added to concerns about lagging demand.
Wednesday's prices reflect the lowest levels of crude oil since June this year, shuffling between a 3.5 and 4% loss throughout the first part of the day.
At 1:34 p.m. ET on Wednesday, Brent crude was trading $74.64, down 3.32%, for a $2.56 loss on the day. WTI was trading at $69.71, down 3.61%, for a $2.61 loss on the day.
U.S. benchmark oil prices are down nearly 20% in the fourth quarter, to below $75 a barrel.
Total gasoline stocks from the Energy Information Administration (EIA) for the week ended November 24 were at 218.2 million barrels, compared to 213.8 million barrels for the same time period last year.
"There is demand destruction coming in from the fuel side. The market is more demand focused than supply focused right now," Dennis Kissler, senior vice president of trading at BOK Financial, told Reuters on Wednesday.
Record U.S. oil production has been vying with OPEC+ for market price influence. The most recent manifestation of this was the OPEC+ meeting on November 30, during which a voluntary cut of 2.2 million barrels per day was announced. That announcement failed to push oil prices upwards, and the focus remains on U.S. production.
The Saudi Energy Minister on Monday criticized speculators after prices continued to drop for failing to understand the OPEC+ output cut deal. Last week, the EIA reported that U.S. average daily production for September remained unchanged from its record-high rate in August of 13.24 million barrels, despite cost inflation and lower international oil prices. At the same time, American shale producers have no intention of letting up on the drill bit.
Additionally, weak economic data coming out of China continues to suggest weak demand, weighing on crude prices.
By Tom Kool for Oilprice.com
Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations More