RIYADH: Oil prices slid on Friday, a day after reaching a seven-year high, as higher inventories of US crude and fuel prompted profit taking.
Brent crude fell 2.1 percent to $86.50 a barrel as of 12:21 p.m. Riyadh time after touching $89.50 on Jan. 20, the highest level since October 2014. US benchmark WTI declined 2.2 percent to $83.65 a barrel after reaching a seven-year high on Wednesday.
Both benchmarks are still headed for a fifth straight weekly advance and are up about 10 percent this year.
US gasoline inventories rose by 5.9 million barrels last week to their highest since February 2021, the US Energy Information Administration said in a report on Thursday. Crude stockpiles increased by 515,000 barrels last week.
“An unexpected increase in US crude stockpiles prompted investors to take profits,” said Tatsufumi Okoshi, senior economist at Nomura Securities, who added the recent rally has been overdone. “Still, losses were limited as expectations that supply tightness would continue amid recovering demand and geopolitical tensions between Russia and Ukraine and in the Middle East kept investors cautious about selling.”
Investors are concerned about potential disruptions to supply after Yemen’s Houthis attacked the UAE, OPEC’s third-largest producer, and Russia, the world’s second-largest oil producer, makes increasingly ominous noises about a potential invasion of Ukraine.
However, the International Energy Agency said on Wednesday that oil supply will soon overtake demand as some producers are set to pump at or above all-time highs, while demand holds up despite the spread of the omicron coronavirus variant.
Oil prices were also supported by French oil giant TotalEnergies’s announcement on Friday that it would withdraw from Myanmar over “worsening” human rights abuses committed since the country’s military took power in a February 2021 coup.
“The situation, in terms of human rights and more generally the rule of law... has led us to reassess the situation and no longer allows TotalEnergies to make a sufficiently positive contribution in the country,” the company said in a statement.
A fire broke out early Friday at a site belonging to the Kuwait National Petroleum Company, forcing a suspension of export operations there, the company said in a statement.
The fire in the Shuaiba Industrial Area in eastern Kuwait did not result in any injuries, according to a brief statement issued by the company. The fire occurred at a petroleum coke flowline. The coal-like substance is a byproduct of refined crude oil that is used in the steel and aluminum industry.
Only a week ago, a deadly fire erupted during maintenance work at a major oil refinery run by the same company, killing two Asian workers. Another 10 were wounded, five of them critically. An earlier fire erupted at that same oil refinery three months prior, resulting in several injuries.
Kuwait, a nation home to 4.1 million people, has the world’s sixth-largest known oil reserves.