Oil prices fell Wednesday after a strange impact caused by freezing weather in the United States.
Although freezing weather usually raises oil prices, this time it has forced refineries in the southern states to close, thus reducing demand and suddenly increasing U.S. inventories.
Data for the sector showed a sudden increase in U.S. crude inventories last week.
The American Petroleum Institute (IPC) said Tuesday that crude inventories increased by 1 million barrels in the week ending February 19, compared with estimates of a decline of 5.2 million barrels in a Reuters poll.
The Institute’s data showed that refinery crude consumption decreased by 2.2 million barrels per day.
West Texas Intermediate futures fell 56 cents, or 0.9%, to $61.11 a barrel by 0506 GMT, after falling three cents on Tuesday.
Brent crude futures fell 35 cents, or 0.5%, to $65.02 a barrel, wiping out a 13-cent gain on Tuesday.
But Reuters technical analyst Wang Tao said Brent could rise to a range of $66.45-66.97 per barrel again, as its wave pattern and forecast analysis suggest.
“The key question is how quickly Us oil supplies are recovering,” said Commonwealth Bank analyst Vike Dhar.
“It looks like supplies will recover faster than refineries, and supply will exceed demand in the next few weeks. This will put negative pressure on the market.”
Position of stocks
Investors will await confirmation from the U.S. Energy Information Administration later in the day that crude inventories increased last week, despite a blow to shale ore production amid an unprecedented ice wave in the U.S. South.
The price drop is a breathtaking truce after Brent crude and West Texas Intermediate rose more than 26 percent to a 13-month high.
Prices jumped due to disruption of U.S. supplies and supply compliance by the Organization of Petroleum Exporting Countries (OPEC) and its allies, the so-called OPEC+group, led by an additional reduction of 1 million barrels per day by Saudi Arabia.