Oil futures traded lower early Thursday, after a large increase in U.S. gasoline inventories sparked the largest one-day selloff of 2023 and sent crude to its lowest close in more than a month.
West Texas Intermediate crude for November delivery
fell 92 cents, or 1.1%, to $83.30 a barrel on the New York Mercantile Exchange after ending the previous session at its lowest since Aug. 31.
December Brent crude
the global benchmark, was down 81 cents, or 0.9%, at $85 a barrel on ICE Futures Europe, after ending Wednesday at its lowest since Aug. 29. Both WTI and Brent plunged 5.6% in Tuesday’s session.
Crude tumbled Wednesday after the Energy Information Administration reported that U.S. gasoline inventories climbed by 6.5 million barrels in the week ended Sept. 29. Analysts surveyed by S&P Global Commodity Insights, on average, had looked for an unchanged figure.
“Gasoline inventory builds have spilled over into crude markets amid concerns about a potential 2024 recession driven by rising interest rates and caused a shift in the crude futures curve that has negatively impacted prompt crude prices,” Stephen Innes, managing partner at SPI Asset Management, said in a note.
Analysts said a buildup in speculative long positions as WTI and Brent pushed above $90 a barrel last month also set the stage for a violent round of profit-taking.
Commodity Futures Trading Commission data last week showed net long positions in WTI futures had moved to a 22-month high of 314,519 contracts, noted Robert Yawger, executive director for energy futures at Mizuho Securities.
Long position holders are in “semi-panic mode here, with WTI down over 10% in the five days since trading to a one-year high of $95.05 on Sept. 28,” he said.