Oil holds drop from seven-year high as energy crunch fears ease

Oil held losses in Asian trading after US crude stockpiles grew more than expected and Russia offered to ease a natural gas crisis.

Futures in New York dipped to near $77 a barrel after retreating almost 2 per cent on Wednesday. US crude inventories expanded by 2.35 million barrels last week, according to government data, more than double the median estimate in a Bloomberg survey.

Russian President Vladimir Putin said record volumes of natural gas could potentially be exported to Europe this year as the continent faces an energy crunch. Gas prices fell after his remarks.

Oil rallied to the highest since 2014 this week as an energy crunch from Europe to Asia raised the prospect of greater demand for crude and oil products ahead of winter, while OPEC+ said it would restore only a relatively modest amount of supply to the market in November as planned. Saudi Aramco said the gas crisis has already boosted consumption, while the Financial Times reported the US is considering the release of emergency oil reserves.

“High energy prices are mostly centered around supply-side issues and they do not look like they will persist beyond winter,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “Where prices are at right now, I think they look reasonable, but I still have my doubts about $100 oil.”

US gasoline stockpiles rose by around 3.3 million barrels last week, while distillate inventories slipped by 396,000 barrels, according to data from the Energy Information Administration. Crude supplies at the key storage hub in Cushing, Oklahoma, expanded for a second week.

Exports from Russia’s Gazprom to Europe in the first nine months of the year were close to all-time highs, according to the company. If that pace is sustained for the rest of 2021, it would be a record year, Putin said at a televised meeting on Wednesday.