Crude oil prices dropped on larger US crude inventories

Oil Prices fall on inventory surge

Crude Oil Prices dropped more than 1% in trading on Wednesday and in part, because of a buildup of U.S. crude oil inventories.

However, traders viewed that inventory spike as material supply pressure and not noise. Oklahoma Energy analysts warn that rising U.S. storage elevates short-term glut risk conditions across global trading flows.

Additionally, the decline added to growing concerns about a possible global oil glut.

Inventory data drives the move

U.S. crude stocks rose by 5.2 million barrels to 421.2 million barrels last week, the Energy Information Administration said, compared with analysts’ expectations for a 603,000-barrel rise.

Therefore, the surprise magnitude drove immediate futures selling pressure across automated trading desks.

Gasoline demand offsets deeper losses

But there were signs of stronger-than-expected gasoline demand limited oil price losses.

Gasoline inventories fell by 4.7 million barrels last week to 206 million barrels. Analysts had expected a 1.1 million-barrel draw.

Also, winter fuel switching patterns continue to build into the seasonal outlook, which partially stabilizes gasoline burn rates when crude weakens.

Benchmarks move lower across the board

Brent crude futures closed 92 cents, or 1.43%, lower at $63.52 a barrel, while U.S. West Texas Intermediate crude settled 96 cents, or 1.59%, lower at $59.60 on the New York Mercantile Exchange.

Additionally, spread traders noted the selloff remained orderly and aligned with Wednesday risk sentiment moves tied to Fed rate sensitivity.

Natural gas weakens

Natural gas slipped on Wednesday, settling at $4.228 MMBtu after a drop of $0.115 or 2.65%.

However, winter strip volatility remains elevated and gas remains fundamentally weather-reactive even when crude disconnects intraday.

Oklahoma Energy stocks move big

Wednesday was a big day for most Oklahoma Energy stocks including NGL Energy Partners with a more than 26% jump for the day.

Finally, regional traders said the divergence shows that not all equity names react directly to Oil Prices on inventory day because capital rotation behavior continues to amplify single-name upside.

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