Oil prices edged lower Wednesday as U.S. gasoline stocks rose significantly, suggesting demand might be faltering in the world’s largest economy.
U.S. crude oil inventories tumbled by 6.67 million barrels for the week ending Jan. 19, but gasoline stocks surged by 7.18 million barrels, according to the American Petroleum Institute.
Rising gasoline stocks are a signal that demand might be weakening as supply returns to the market after disruptions in Libya and North Dakota.
Libya restarted production Sunday at the Sharara oilfield, which has the capacity to produce 300,000 barrels per day. The oilfield was shut down for two weeks due to protests.
And oil output is slowly recovering in North Dakota after winter storms hit production this month in the third-largest crude producing state in the U.S. Crude production was down 250,000 to 300,000 barrels per day on Tuesday, compared to 700,000 bpd last Wednesday, according to the state pipeline authority.
Oil prices should remain range bound in the first quarter of 2024 barring a significant escalation in the conflict in the Middle East, according to Vikas Dwivedi, an oil and gas strategist at Macquarie.
Brent should remain in a range of $72 to $82 unless supply is materially affected in the Middle East, Tamas Varga, an analyst with PVM Oil Associates, wrote in a note Wednesday.
Geopolitical risk is largely already factored into prices, according to Dwivedi. “Without current geopolitical tensions, we believe crude would sell off meaningfully,” the analyst said.
The market is waiting for the Energy Information Agency to release the latest weekly U.S. crude supply data at 10:30 am ET.