Brent sheds following a rise in US crude stocks

The front-month ICE Brent contract has lost by $0.10/bbl on the day, to trade at $66.92/bbl at 09.00 GMT.

IMAGE: Oil storage tanks. Getty Images

Upward pressure:

Growing aggression between Russia and Ukraine has continued to lend some support to Brent crude’s price this week.

The Ukrainian military has targeted major Russian oil facilities in recent weeks, including oil refineries in Krasnodar and Syzran, according to a Reuters report.

“Escalating tensions persist as Ukraine continues to target Russian oil refineries, disrupting Russia’s oil product flows,” remarked ANZ Bank’s senior commodity strategist Daniel Hynes.

The Krasnodar oil refinery produces about 3 million mt/year of light petroleum products, the Reuters report adds.

Downward pressure:

Brent crude has remained under pressure amid concerns of increasing OPEC+ supply.

The group is scheduled to meet on Sunday to discuss production levels, after eight members of the group unwound voluntary cuts of 2.2 million b/d over the past six months. The voluntary production cuts were announced in 2024.

“Market expectations are growing that the [OPEC+] group will continue to push more barrels into the market, in an effort to gain market share lost to US shale producers in recent years,” Hynes said.

The latest US crude inventory report has put further downward pressure on Brent. Commercial US crude oil inventories have gained by 2.4 million bbls to touch 421 million bbls for the week ending 29 August, according to data from the US Energy Information Administration (EIA).

“Sentiment wasn’t helped by a bearish US inventory report,” Hynes said. US crude oil stockpiles are “now at their highest level since early August,” he added.

A rise in US crude stocks can indicate lower demand for oil and put some downward pressure Brent's price.

By Aparupa Mazumder

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