West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $63.60 during the early Asian trading hours on Thursday. The WTI edges lower as data showing an increase in US diesel stockpiles stoked worries about demand. However, the persistent geopolitical tensions might help limit the black gold’s losses.
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US crude oil stocks posted a large decline last week, indicating stronger demand. Data released by the US Energy Information Administration (EIA) on Wednesday showed that crude oil stockpiles in the US for the week ending September 12 fell by 9.285 million barrels, compared to a rise of 3.939 million barrels in the previous week. The market consensus estimated that stocks would decline by 1.5 million barrels.
Nonetheless, distillate stocks increased by 4.0 million barrels, raising demand concerns and undermining the WTI price. “Looks like markets are responding on diesel, which is the soft underbelly of the entire complex,” said Phil Flynn, a senior analyst at Price Futures Group.
Ukraine’s attacks on Russia’s
Russian oil supply risks will be closely watched after Ukraine’s attacks on Russia’s energy infrastructure intensified in recent weeks. Reuters reported earlier on Tuesday that Russia’s oil pipeline monopoly, Transneft, which handles more than 80% of the country’s oil, warned producers they may have to cut output following Ukraine’s drone attacks on critical export ports and refineries. Russian supply disruption risks could lift the WTI price in the near term.