(Bloomberg) — Oil fell as U.S. crude inventories recorded an unexpected increase as the Biden administration resumed efforts to secure a ceasefire in the Middle East.
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West Texas Intermediate fell about 1.6% to below $71 a barrel, while global benchmark Brent fell to just under $75. U.S. government figures showed the country’s crude oil inventories rose by 5.47 million barrels last week, exceeding the 1.6 million barrel increase that industry groups had predicted on Tuesday.
This caused the WTI prompt spread (the difference between the last two contracts) to fall to its lowest level since June during trading, in a sign of oversupply. On a seasonal level, crude oil throughput is currently at its highest since 2018 as refinery operations increased.
But Brian Kessens, managing director at Tortoise Capital Advisors, said oil prices have found a bottom as concerns about geopolitical risks persist. “If we had seen something really noteworthy on the production side, that might have been a bigger factor, but this is a number that the market can look at and say, ‘What’s going on macro-wise?’ is.”
Oil prices were on a roller coaster ride in October, with traders flooding the options market as conflicts in the Middle East raised concerns about supply disruptions in a region that accounts for about a third of global output. Meanwhile, US Secretary of State Antony Blinken and Israeli Prime Minister Benjamin Netanyahu agreed that the recent killing of Hamas leader Yahya Sinwar opens new possibilities for ending the conflict in Gaza.
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–With assistance from Sarah Chen and Maggie Eastland.
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