Oil prices fell by more than $5 on Thursday after higher U.S. gasoline stockpiles stoked demand worries and returning energy supply from Libya and Russia eased supply concerns.
Brent crude futures lost $5.13, or 4.8%, to $101.79 a barrel by 1039 GMT after slipping 0.4% in the previous session. U.S. West Texas Intermediate crude futures were down $5.05, or 5.06%, at $94.83 after a 1.9% drop on Wednesday (20).
Oil futures trading volumes have been thin and prices volatile as traders have to square weaker energy demand with tighter supply resulting from the loss of Russian barrels after the country’s invasion of Ukraine.
The European Central Bank is set to join other central banks in raising interest rates, focusing on fighting runaway inflation rather than the economic downturn, which can weigh on oil demand. An announcement is due at 1215 GMT.
European stocks, which often move in tandem with oil prices, also dipped ahead of the rate decision.
U.S. gasoline inventories (USOILG=ECI) rose by 3.5 million barrels last week, government data showed on Wednesday, far exceeding analyst forecasts.
“U.S. gasoline demand is struggling to shift into top gear during the peak summer driving season,” said PVM analyst Stephen Brennock.
The Bank of Japan projected inflation would exceed its target this year in fresh forecasts issued on Thursday, but the central bank maintained ultra-low interest rates.
Libya’s National Oil Corp (NOC) on Wednesday said that crude production had resumed at several oilfields after the lifting of force majeure on oil exports last week.
On the natural gas front, Gazprom (GAZP.MM) resumed flows via the Nord Stream 1 pipeline that supplies more than a third of Russian gas exports to the European Union.
However, one of Canada’s major oil export arteries, the Keystone pipeline, was operating at reduced rates for a third day on Wednesday, operator TC Energy said.