Industry data showing crude oil stockpiles rose more than expected has led oil to fall on Wednesday. Moreover, fuel inventories increasing unexpectedly last week in the United States, also led to a decline.
By 1050 GMT Brent oil futures fell $1.01 cents, or 1.2%, to $85.39 a barrel after closing at the highest level in seven years on Tuesday.
West Texas Intermediate (WTI) futures lost $1.19, or 1.4%, at $83.46 after gaining 1.1% in the previous session.
Both benchmarks remain near multi-year highs and closed on Friday, with a seventh straight weekly gain.
Market sources on late Tuesday said crude oil inventories rose by 2.3 million barrels in the week ending Oct. 22. The figure was more than the estimated 1.9 million barrel gain.
Gasoline inventories rose by 500,000 barrels and distillate stocks increased by 1 million barrels when both were previously forecast to drop.
Analysts have said that prices are starting to look overbought. That is, with Brent rising for the past eight weeks and WTI climbing for the past 10 weeks.
Craig Erlam, senior market analyst at OANDA said that barring more bullish headlines, which is possible considering what they saw yesterday, they could see some profit-taking in Brent and WTI. He said it would be healthy for the market.
At the WTI oil delivery hub in Cushing, Oklahoma, storage tanks are more depleted than they have been in the past three years. Prices for longer-dated futures contracts were pointing to supplies staying at those levels for months.
Meanwhile, on Wednesday, China’s thermal coal futures slumped to their lowest in more than a month. The downward movement marked a sixth consecutive day of declines. This came after the country’s state planner said it would conduct clean up and rectification work on coal storage sites.
The most-traded thermal coal futures contract on the Zhengzhou Commodity Exchange hit its daily trading limit, falling 10% on Wednesday.
The contract is down more than 40% from the record highs touched last week due to a coal supply shortage. However, it is still higher by more than double since the start of the year.
A record premium over the most active thermal coal futures contract was hit by spot coal prices on Monday. That was with trading drying up as China launched a probe into price index providers.
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