Oil drops sharply, weak fuel demand worries in the United States

Brent ended down 2.86% at $103.86 and WTI ended down 3.53% at $96.35.

Oil prices fell on Thursday, weighed down by a jump in gasoline reserves in the United States implying a drop in demand, when crude production resumed in Libya after three months of disruption.

The barrel of Brent from the North Sea for delivery in September lost 2.86% to 103.86 dollars after dropping more than 4% in session.

The barrel of American West Texas Intermediate (WTI) for delivery the same month, which is the first day of use as a benchmark contract, fell 3.53% to 96.35 dollars, shortly after having unscrewed by 5%.

On Wednesday, the US Energy Information Agency (EIA) reported an unexpected rise in gasoline reserves, which rose by 3.5 million barrels, more than triple market expectations (+ 1 million) even if crude inventories have fallen.

“The highlight of this report is the low fuel consumption,” noted Stephen Brennock, analyst at PVM Energy.

“The American demand for gasoline is struggling to move up a gear in this period” summer in the United States, marked by many trips for the holidays which usually lead to an increase in the demand for fuel, underlined the analyst.

In Libya, the Libyan National Oil Company (NOC) announced on Wednesday the resumption of production in several oil fields, which played on the fall in prices.

Since mid-April, six major oil fields and terminals had been closed by groups close to the Eastern camp, which demanded in particular a “fair distribution” of oil revenues.

“Furthermore, a series of bleak macroeconomic updates did little to allay fears of an impending recession,” noted Stephen Brennock, also dampening crude prices.

Inflation in particular accelerated further in Canada and the United Kingdom, reaching a new peak in 40 years.

The COVID-19 epidemic in China, a major oil consumer, is also contributing to fears of falling demand. The country recorded its highest number of COVID-19 cases since May on Saturday, leading to lockdowns under the strict “zero COVID” policy.

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